DUMA GQUBULE: Reserve Bank must face up to its responsibility of supporting the real economy
Its outrageous decision not to cut interest rates last week is out of line with major central banks across the world
The Reserve Bank’s outrageous decision not to cut interest rates last week, despite dark clouds hovering over the global and domestic economy, has again illustrated the need to scrap inflation targeting and explicitly change its mandate to include economic growth and employment. With inflation at 4.1% and the prime lending rate at 10.25%, there is no justification for a punitive, usurious real prime lending rate of 6.15% in an economy that will experience the fifth consecutive year of declining GDP per capita in 2019. At the end of January the US Federal Reserve made a dramatic policy U-turn and decided to halt plans to increase interest rates in 2019, due to cross-currents that included slower growth in China and Europe. During the same month the People’s Bank of China cut its required reserve ratio — the share of deposits banks must hold in reserve — by 1% in a move that was expected to inject $117bn into the country’s slowing economy. On March 7 the European Central Bank also she...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.