EDITORIAL: Why South Africa needs a lower inflation target
Bank makes a good case but there are obstacles to overcome, including government inefficiency
09 May 2024 - 05:00
The Reserve Bank is pushing to have the inflation target lowered from 4.5% to 3%. This, it argues, would bring us in line with most other emerging markets. But the National Treasury, while conceding there is a case for revising the target, appears reluctant to make the leap.
The holdup is not because of flaws in the Bank’s logic but rather because the government’s inefficiency keeps overall inflation elevated. Also, explaining why a lower target would be a good thing is going to be a hard sell in an economy that is barely growing...
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