EDITORIAL: Cheap talk and runaway prices
If Deputy Finance Minister Sfiso Buthelezi thinks inflation targeting is not working, he should tell us why
It is hard to know whether to be more concerned about Deputy Finance Minister Sfiso Buthelezi’s apparent ignorance about economic policy or his apparent antagonism towards inflation targeting. It is worth keeping in mind that inflation targeting is government policy — the government put it in place in 2000 as the anchor for monetary policy. The Reserve Bank has to implement the policy, using interest rates and other tools such as communication to manage inflation and try to keep it in the 3%-6% range, as the Treasury mandated it to do. But it is the government that decides, so if Buthelezi has issues with SA’s monetary policy approach, he should be getting his own team in the Treasury to do some work on whether there is a need to change it. And it is up to him and Finance Minister Malusi Gigaba to make the case if inflation targeting is not working as intended to ensure price stability and if change is indeed needed. Instead, Buthelezi told an audience this week that the policy of i...
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