Johannesburg – Finance Minister Enoch Godongwana has announced a new inflation target for South Africa of 3 per cent with a 1 percentage point tolerance band.
Announcing the changes during his Medium Term Budget Policy Statement on Wednesday, 11 November 2025, Minister Godongwana said: “Today I announce a new inflation target for South Africa of 3 per cent with a 1 percentage point tolerance band”.
Minister Godongwana added: “This decision follows agreement between the Governor of the South African Reserve Bank and my consultations with the President and Cabinet.
“The 1 percentage point band provides flexibility to accommodate any unexpected inflationary shocks.
“This is in line with South Africa’s approach to inflation targeting, which has always been a flexible one, looking beyond short-run deviations in inflation.”
Minister Godongwana said the Reserve Bank will pursue the target on a continuous basis and clearly communicate any deviations from the target.
“This new target immediately replaces the previous target range of between 3 and 6 per cent, and will be implemented over the next two years,” said Minister Godongwana.
“Over time, the lower target will decrease inflation expectations and inflation, creating room for lower interest rates.
“This supports household spending and business investment, boosting economic growth and job creation.”
He explained that the short-term fiscal costs of a lower target, which include lower nominal GDP and revenue growth, will make achieving fiscal targets more challenging.
“Yet the long-term benefits of taking this step far outweigh these costs,” Minister Godongwana stated.
“We remain committed to ensuring that our macroeconomic policies serve the best interests of all South Africans.”
