The SA Reserve Bank eventually ran out of excuses not to cut interest rates. The Bank’s monetary policy committee voted for a 25-basis point cut in the repo rate to 6.25%. But with inflation at 3.6% in November, SA still has a punitive, usurious real prime lending rate of 6.15%. This is way too high in a country that is in near-recessionary conditions and has had four consecutive years of declining GDP per capita.

With the IMF and the World Bank forecasting another three years of declining GDP per capita, the Bank has shown that it does not care about the pain of millions of South Africans. Even within the constraints of an archaic inflation targeting framework that is not fit for the purpose of creating jobs for 10.3-million unemployed South Africans, there is scope for aggressive interest rate cuts.

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