DG Cassim unpacks SARB 2025 Biennial Research Conference

Deputy Governor Rashad Cassim of the South African Reserve Bank recently participated in the SARB 2025 Biennial Research Conference, where the focus was on evaluating the effectiveness of the country's inflation targeting framework. The conference, which brings together international experts and central bank officials, aimed to assess whether the current policies and frameworks are still relevant and effective in the ever-changing economic landscape. Cassim highlighted the importance of critically evaluating the central bank's performance and communication strategies to ensure transparency and public understanding. The debate at the conference centered around the idea of lowering the inflation target from the current 4.5% to around 3%, in line with global standards. However, Cassim emphasized the need to consider the potential costs and benefits of such a move, especially in an economy where various factors like exchange rates and administered prices play a significant role in determining prices. The conference served as a platform to gather diverse perspectives on the implications of reducing the inflation target and the associated trade-offs. One of the key points of discussion was the concept of the sacrifice ratio, which refers to the short-term economic growth that might need to be foregone to achieve a lower inflation target. Researchers and analysts had differing opinions on the potential costs involved in lowering the target, underscoring the complexity of the decision-making process. Cassim underscored the importance of rigorous empirical research in informing any policy changes to ensure optimal economic outcomes. Furthermore, Cassim highlighted the ongoing macroeconomic review being conducted by the National Treasury, which evaluates various aspects of fiscal and monetary policy in South Africa. The insights gathered from the conference will contribute to shaping the country's macroeconomic policy framework and decision-making process. While the timeline for any potential changes to the inflation target remains uncertain, Cassim reiterated the significance of engaging in comprehensive dialogue and analysis to determine the most suitable path forward. Beyond the focus on inflation targeting, the conference also delved into broader economic challenges facing South Africa, such as stimulating economic growth and addressing the high unemployment rate. Sessions addressing the reform agenda and the private sector's perspective on inflation targeting further enriched the discussions, highlighting the interconnected nature of economic policy decisions. Overall, the SARB 2025 Biennial Research Conference provided a platform for in-depth discussions on critical economic issues and policy considerations, underscoring the central bank's commitment to fostering informed dialogue and evidence-based decision-making.