By Black Star News
Photos: Wikimedia Commons
South Africa’s central bank has made a pledge to lower its inflation target to 3 percent from 4.5 percent.
The new policy was laid out Thursday by Reserve Bank Governor Lesetja Kganyago (shown above with former U.S Secretary of the Treasury Janet Yellin). It was also announced that the bank decided to slash the benchmark rate by 25 basis points to 7 percent.
Those who support a lower inflation goal contend the move will strengthen trust in the economic security of the nation by eventually helping to lower government and private sector borrowing prices.
However, the government has not signaled its agreement.
Reportedly, South African Finance Minister Enoch Godongwana, who has the final say in the decision, has shown reticence in altering the rate.
Razia Khan, chief economist for Africa and Middle East at Standard Chartered, characterized the new goal rate as “a significant macroeconomic positive.” The government of South Africa’s bond yields are said to have dropped, after the announcement, to their lowest in half a decade.
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