GRAHAM BARR & BRIAN KANTOR: Why rate hikes are the wrong weapon
The Reserve Bank is misdiagnosing our inflation problem and the therapy it’s using — interest rates — is doing more harm than good
The Reserve Bank persists in arguing that its interest hike will benefit the South African economy, and hence society in general, because it will bring down the rate of inflation.
The Bank accepts that the hike will have the undesirable short-term effect of limiting growth but maintains that in the longer term it is “worth it” because of the positive economic impact of lower rates of inflation and, it stresses, lower expected rates of inflation...
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