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THE Reserve Bank would prefer not to raise interest rates during a slowdown, but as long as the country’s economy remained geared to producing weak growth and high inflation, it would have to do just that.This was the hard-hitting message that Reserve Bank governor Lesetja Kganyago delivered at the Labour Law Conference in Johannesburg on Wednesday.He said inflation appeared to have settled around the top of the target range, close to 6%. This implied that nominal market interest rates would never fall much below 9%. While this was hardly acceptable, SA had too much inflation to lower interest rates."If we want lower interest rates … then we have to lower inflation outcomes arising from administered price processes and, above all else, the way in which prices and wages are determined in our collective bargaining system," he said.According to Kganyago, reducing the inflationary impulse from price-and wage-setting to about the middle of the 3%-6% inflation target range would help to c...

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