MONETARY POLICY
Bank vigilance needed in uncertain times
The Reserve Bank’s mandate is to target inflation, not the level of the rand, and it is important it be seen to be sticking to its mandate, writes Hilary Joffe
What would it take for the Reserve Bank to cut interest rates? Two pieces of communication that came out of the Bank a couple of weeks ago highlight the high degree of uncertainty our central bankers contend with, as do central bankers everywhere. But they also hint at the robust debate that must be going on over what the triggers would be for a cut — or indeed a further hike. The first piece was the statement of the Bank’s monetary policy committee, which said after its November meeting that while it "retains the view that we may be close to the end of the hiking cycle, there may be a reassessment of this position should the upside risks transpire". The second piece was a speech by governor Lesetja Kganyago the very next day, in which he told the annual Bank of America Merrill Lynch macro conference: "Given our current forecast trajectory, we may be closer to the end of the hiking cycle, but the bar for cutting rates is very high."The committee’s nuanced and careful statements have...
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