South Africa Expected to Lower Inflation Target to 3% in November

South Africa's annual inflation rate rose slightly to 3.4% in September 2025, remaining within the Reserve Bank's target range of 3%-6%. Fitch Ratings expects the National Treasury to formally lower the inflation target to 3% during the Medium-Term Budget Policy Statement on November 12, aligning with the central bank's July announcement to anchor inflation at the lower end of the previous range. Despite this shift, Fitch notes the Reserve Bank is likely to tolerate inflation slightly above the 3% target without immediate rate hikes. Fitch affirmed South Africa's BB- credit rating with a stable outlook, citing structural challenges like unemployment and low investment, and projects moderate GDP growth of 1.2% through 2027. Stabilizing government debt-to-GDP ratios and improved medium-term growth prospects are seen as important for future fiscal consolidation. Market reactions to the inflation target shift have been positive, with bond yields falling and the rand strengthening.