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...

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