KARABO MASHUGANE: Higher SME productivity will stop Reserve Bank being a punching bag
SA suffers from low productivity, so inflation sets in quickly, forcing the Bank’s hawkish hand before the effect of stimulus is seen
The SA Reserve Bank’s monetary policy committee kept the repo rate at 8.25% in January, as was widely expected. The Bank has faced a lot of criticism for the round of rate hikes that preceded the January decision, especially where inflationary pressure has come from external factors such as the increase in global oil prices.
High interest rates weaken economic growth and are undeniably undesirable. But inflation might be even worse, and it has a disproportionate effect on the poor as well as wage earners and small and medium enterprises (SMEs), in whose name a lot of the criticism of the Reserve Bank is made. ..
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