Talk of the South African Reserve Bank’s inflation target being lowered has reared its head again. In this Update, we answer five key questions on what this could mean for the economy. In the near term, the adoption of a lower target would prompt us to expect an even more cautious approach from the SARB towards interest rate cuts. But we suspect that the medium-term inflation risks in South Africa are skewed towards the upside, even if the target is lowered.
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