CLAIRE BISSEKER: Lower the inflation target then let inflation expectations do the work

It is hard to imagine that the great Argentinian footballer Diego Maradona could have anything in common with monetary policy, but he is a useful metaphor for the trick the SA Reserve Bank hopes to pull off in its bid to have SA’s inflation target lowered to 3%.

Emboldened by the Bank’s success in shifting actual inflation and inflation expectations from a sticky 6% to 4.5% over the past few years, without having to hike rates or sacrifice growth unduly, governor Lesetja Kganyago thinks it’s high time for SA to lower the 3%-6% target band to a 3%-point target...