ASHA SPECKMAN: Bank schools political bosses in inflation targets
Trade also a factor in maintaining delicate balance of economy, Reserve Bank notes
In yet another dramatic week for the central bank as its inflation gauge continued to come under fire, Reserve Bank deputy governor Kuben Naidoo said there may be scope to alter the inflation-targeting band - but only to align South Africa with its trading partners. Naidoo's comments were in response to Deputy Finance Minister Sfiso Buthelezi on Monday suggesting that the 3%-6% inflation-targeting framework may be hampering economic growth. Buthelezi, speaking at the Gordon Institute of Business Science, said it may be time to debate the policy again. "Who of us knows how we arrived at this 3%-6% ... It might have been the right policy at the time but when we are placed in the economic crisis we are facing of low growth, is it appropriate?" he said. Urgent application Inflation targeting enables price stability, a key element of monetary policy, which is the responsibility of the Reserve Bank. In the long term, price stability supports economic growth by safeguarding the value of th...
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