LETTER: Interest rate hike won’t help

I’m not sure that Peter Bruce gets it; I know the SA Reserve Bank doesn’t (“If it were up to Mkhwebane, inflation would have eaten your lunch”, July 20).  

For the record, quoting from The Economist’s economic & financial indicators (July 9-15): the Intelligence Unit’s forecast of GDP growth for 2022 is 2.3% for the US and only 1.9% for SA. Annual consumer price inflation for the US 8.6% and for SA 6.6%. Current account balance as a percentage of GDP forecast for 2022: -4.3% for the US, only -1.1% for SA. Interest rates (10-year government bond yields) 2.9% in the US and 10.7% for SA. Unemployment in the US is 3.6%, in SA 34.5%.

Can Bruce or the Reserve Bank explain to the idiots of SA how in heaven’s name an increase of 75 basis points in the repo rate is going to make the slightest dent in SA’s inflation rate when the country is battling to increase economic growth and make any kind of inroads into a soaring unemployment rate?

It is simply muddled thinking. The Mkhwebane issue is completely irrelevant in this context.

David Southey 
Via email

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