Lesetja Kganyago: Inflation-targeting at 21- lessons for the future

A public lecture by Mr Lesetja Kganyago, Governor for the South African Reserve Bank, at Stellenbosch University, virtual, 8 September 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

This is a year of anniversaries for the South African Reserve Bank (SARB). The institution itself has reached 100 years. The rand has turned 60. We are commemorating 25 years of central bank independence, and also 21 years of inflation-targeting.

Inflation-targeting is the youngest of these achievements, but it may also be the biggest success.

Turning 100 is always a special anniversary, but for 73 of those years the SARB was embedded in an undemocratic state. Similarly, we are proud of the rand, but we have not always done a good job defending its value. Inflation has averaged 8% over the past 60 years and 9.4% before the introduction of inflation-targeting, leading the currency to lose most of its buying power. Even central bank independence coincided with problematic policy choices in the early years before we adopted inflation-targeting, as I will discuss later in this speech.