If the SA Reserve Bank hikes interest rates by 50 basis points this week there will be an outcry from low-income groups. Yet even though the poor are buckling under the pressure of rising living costs the Bank will be justified in taking a scythe to rising inflation and inflation expectations.
It will bear the criticism stoically, explaining how high inflation hurts the poor and those on fixed incomes most; that keeping inflation low and stable is the best contribution it can make to SA’s prosperity; and that the higher inflation, the higher interest rates a country must have — or suffer the consequences...
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