COMPANY COMMENT: Foolish to put a bounty on the golden goose
Inflation targeting is critical to protecting the purchasing power of all South Africans
Public Protector Busisiwe Mkhwebane’s about-turn on her proposed change to the Reserve Bank’s constitutional mandate, while a relief, is infuriating. It was this remedial action, contained in her Absa-Bankorp report, that led to the controversial proposal at last week’s ANC national policy conference that the Bank be nationalised. Moreover, as was clear from the arguments for nationalisation, Mkhwebane’s recommendations served only to confuse the public and party members about how the Bank operates and what its mandate means in practice. Mkhwebane’s instruction to Parliament to institute a process that would result in the Bank’s mandate being changed from its focus on protecting the value of the currency in the interests of balanced economic growth to one that focuses on the socioeconomic wellbeing of citizens creates the false impression that inflation targeting, the tool the Bank uses to protect the currency, does not protect citizens’ socioeconomic wellbeing. How mistaken she is....
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