Lesetja Kganyago

Governor, South African Reserve Bank

[PUBLIC LECTURE] Governor Lesetja Kganyago supply shocks, monetary policy and the 3% target

📅 May 11, 2026 SAReserveBank 29 MIN 328 VIEWS 2 SEGMENTS · 2 SPEAKERS

... um honored speaker Governor Leeta Kanyago and Mrs thora Pandi who's in the audience from the South African Reserve Bank ...

What Lesetja Kganyago said

Written from the verified transcript and checked against it. Every figure links to the moment it was said.

Governor Lesetja Kganyago discussed South Africa's monetary policy response to recent supply shocks, emphasizing the importance of managing second-round effects rather than looking through all shocks. He noted that South Africa entered the crisis with inflation at the new 3% target and a moderately restrictive policy stance, which provided a good starting point. He explained the pitfalls of a look-through strategy, including the risk of shocks traveling in groups and the need to assess the starting point. He highlighted the current fuel price shock as the largest in inflation targeting history, with risks from food prices and potential El Niño. Kganyago stressed that the SARB will not pre-commit to a rate path, keeping options open, and will use scenarios to clarify its reaction function. He reaffirmed commitment to returning inflation to 3%, despite the shock delaying the disinflation process.

Key takeaways

South Africa entered the supply shock with inflation at the 3% target and a moderately restrictive policy stance, providing a good starting point.
The SARB will not pre-commit to a rate path, keeping options open to respond to evolving risks.
The SARB's March projections included scenarios with rates unchanged, rising a little, or rising more, all returning inflation to target.
The transition to the 3% target will take longer due to the shock, but credibility gains are not fully reversed.

Numbers and commitments

Figure	What it refers to	Type	At
3%	Inflation target	metric	3:32
50 basis points	Larger rate cuts avoided	other	3:32
25 basis points	Usual rate cut size	other	3:32
6.95%	One-year Treasury bill rate at end of February	metric	3:32
7.76%	One-year Treasury bill rate at end of April	metric	3:32

Jen Snowball 0:00 ↗

Good evening, everybody. Colleagues, students, distinguished guests, including of course, Governor Lesetja Kganyago. Oh, there we go. Including of course, our honored speaker, Governor Lesetja Kganyago, and Mrs. Thureya Panday, who's in the audience, from the South African Reserve Bank. The Vice Chancellor, Professor Sizwe Mabizela, the Deputy Vice Chancellor, Academic and Student Affairs, Professor Mokubung Manamela Makubela, the Dean of the Faculty of Commerce, Professor Anthea Morapeloa, and all the other guests and students who are present here in the room or joining us online for the live stream. My name is Professor Jen Snowball. I'm the Head of Department of Economics at Rhodes University, and the President of the Economic Society of South Africa. It's my great pleasure to welcome our speaker for this evening, the Governor of the South African Reserve Bank, Mr. Lesetja Kganyago, to Rhodes University. Governor Kganyago has served in this role since 2014, and is one of the most respected central bankers, both in South Africa and internationally. He has played an important role in maintaining monetary policy credibility and institutional integrity during a period of considerable global and domestic economic uncertainty. Before his appointment as Governor, he served as the Director-General of the National Treasury, and as Deputy Governor of the Reserve Bank, reflecting a distinguished career in public finance and economic policy. Governor Lesetja Kganyago holds a master's degree in development economics from SOAS University of London and his work has consistently been characterized by a strong commitment to sound economic governance and evidence-based policy making. This evening, he will deliver a public lecture titled Monetary Policy, Supply Shocks and the 3% Target. This topic speaks directly to some of the most pressing macroeconomic challenges of our time, including the management of inflation in an environment shaped by global shocks, uncertainty, and shifting expectations. We are particularly honored to host this lecture at a time when the Department of Economics is preparing to launch a new Master of Applied Economics degree. This forthcoming program is designed to equip students with advanced analytical and empirical skills closely aligned to the kinds of real-world problems and shocks that the governor deals with, I'm sure, on a daily basis. Governor, we are deeply grateful for your time and for the opportunity to engage with your insights this evening. You are most warmly welcome to Rhodes University and I now invite you to the podium to address us.

1 more exchange in this transcript

Cite this transcript

APA, MLA, BibTeX

APA

Kganyago, L. (2026, May 11). [PUBLIC LECTURE] Governor Lesetja Kganyago supply shocks, monetary policy and the 3% target [Interview transcript]. SAReserveBank. CEOInterviews.AI. https://ceointerviews.ai/interview/901194/

MLA

Lesetja Kganyago. "[PUBLIC LECTURE] Governor Lesetja Kganyago supply shocks, monetary policy and the 3% target." SAReserveBank, 11 May. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/901194/.

BibTeX

@misc{kganyago2026_901194,
  author       = {Lesetja Kganyago},
  title        = {[PUBLIC LECTURE] Governor Lesetja Kganyago supply shocks, monetary policy and the 3\% target},
  howpublished = {Interview transcript, SAReserveBank. CEOInterviews.AI},
  year         = {2026},
  month        = {may},
  url          = {https://ceointerviews.ai/interview/901194/},
  note         = {Speaker-attributed transcript with timestamps}
}

▶

Key Quotes (5)

“South Africa falls into the first category. In a world of price pain, we are suffering like everyone else, but things could be worse. We came into this shock with inflation at our new 3% target. The policy stance was reasonably well calibrated, so we did not need to make urgent changes.”

▶ 4:20 POLICY

“The central idea is that you look through the initial or first round effects and focus on second round effects. First round effects are directly linked to the shock and happen fast. The oil prices the oil price goes up and then petrol and transport get more expensive. Monetary policy cannot do much about this.”

▶ 8:21 POLICY

“If you commit to looking through shocks, and then two or three arrive one after another, trust is low, inflation starts to be to fade. Trust in low inflation starts to fade. For instance, if you have a temporary fuel price shock that lasts a year, but 3 months in, you also have a fuel a food price shock, and on top of that, the exchange rate weakens, you do not get 12 months of higher inflation an”

▶ 13:03 POLICY

“In South Africa, we had the lowest policy rate on record. For all these reasons, it made sense to raise rates, and countries that delayed tightening regretted it. This experience underscores the point that good policy, in the face of supply shocks, cannot be reduced to look through the shock.”

▶ 17:38 POLICY

“Although we cannot do much about higher inflation right now, we are very committed to getting inflation back to 3% just where we had it before the shock hit us. It is unfortunate that this shock is hitting during the transition to the new lower inflation target. Until now, that transition was going about as smoothly as we could have hoped. It seemed we were going to complete the disinflation soon.”

▶ 27:16 POLICY

Mentioned in this interview

International Monetary Fund None-International Monetary Fund: Managing director described central bank situation as bad or very bad

Kristalina Georgieva Managing Director: IMF managing director who described central bank situation

Financial Action Task Force: South Africa exited its gray list

S&P Global Ratings: Upgraded South Africa's credit rating

German Bundesbank: Managed 1970s and 1980s inflation better than other central banks

US Federal Reserve: Compared to Bundesbank in managing inflation

Bank of England None-Bank of England: Compared to Bundesbank in managing inflation

Earlier, on the same topics

“The fundamental difference for South Africa is that when the inflation surge came in 2022, our inflation rate was above target. This time when this surge comes, we were on target. In 2022, our policy rate was negative in real terms, meaning the repo rate at the time was below inflation. This time ro”

monetary policy · Apr 17, 2026 at 5:41 →

“We entered the year slightly more optimistic than during the previous MPR release in October 2025. The global economy had adapted and had adapted well to the tariff shock and inflation was easing even only slowly. On the local front, we ushered in a significant monetary policy reform with the announ”

monetary policy · Apr 21, 2026 at 3:07 →

“One of the workhorses we use in monetary policy is a gap model — the CR projection model — that identifies gaps between inflation and its target, growth and potential, the exchange rate and its equilibrium, and interest rates and their natural level; we talk about these gaps every six to eight weeks”

monetary policy · Dec 05, 2024 at 3:03 →

“The South African monetary policy framework last year went through its most fundamental reform in 25 years. It had to do with the lowering of the inflation target. And what that meant was that we got inflation expectations converging towards the target.”

monetary policy · Apr 08, 2026 at 3:05 →

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About Lesetja Kganyago

Lesetja Kganyago, Governor of the South African Reserve Bank, delivered the opening keynote at the 2026 Payments Conference in October, where he discussed ongoing reforms to the national payment system. He noted that non-banks will be able to participate directly in the payment system, that payment system management functions have transitioned to the Reserve Bank, and that the introduction of the QR Plus standard aims to improve interoperability. He reported that the PayShap real-time payment service has surpassed 1 billion transactions since its 2023 inception, with over 1 trillion rand transferred, while acknowledging that PayShap still processes a small share of transactions compared to cash and other electronic transfers. He emphasized the need for consistent customer experiences across banks and described payments as essential economic infrastructure. In September, Kganyago announced the Monetary Policy Committee's unanimous decision to raise the repo rate by 25 basis points to 7.25%, citing geopolitical conflicts, oil price shocks, and global supply disruptions as sources of inflationary pressure. He warned that inflation could rise above 5% in the fourth quarter and stated that the Reserve Bank adopted a more restrictive stance to prevent second-round effects, saying the central bank cannot wait for such effects to materialize before acting. He also noted that South Africa's stronger starting position, including a lower inflation target and positive real interest rates, allowed for a measured response compared to past shocks. The Reserve Bank lowered its growth outlook, projecting annual growth of 1.2% for the year, and Kganyago indicated that future rate decisions would be made meeting by meeting based on incoming data.

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