Protector is correct in seeking wider mandate for Reserve Bank
An obsession with inflation and the rand is exacerbating SA’s lagging economic growth
The public protector’s recent recommendation that Parliament change the Constitution to amend the role of the Reserve Bank may not be as far-fetched as appears at first sight, whether or not it was appropriate for her to do this in terms of her constitutional function. The Bank has been obsessively and exclusively preoccupied with one thing: using monetary policy to contain inflation and thereby support the value of the rand. Her contention that its primary function should instead be to support growth and employment may not be so far off the mark. The accompanying two charts show a comparison between inflation and prime bank lending rates in the UK and in SA. In the UK, the 2008-9 banking crisis was far more severe than anything that occurred in SA, which was to a large extent sheltered from these events at that time.However, the secondary "flow-through" economic effects of it have affected SA strongly in the years since, as its economy is fairly dependent on the western countries c...
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