THEBE MABANGA
Baffling, disappointing and frustrating, in equal measures.
That is the only way to describe the decision by the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) to cut interest rates by 50 basis points last week, bringing the total cuts for 2020 to 275 basis points and leaving the repo rate at 3.75%.
There is room, and a need, to cut more aggressively. The decision represents the MPC at its most hawkish, retreating into a shell of conservatism at a time when the economy needs bold and courageous action. It also confirms, as if any confirmation was needed, that the MPC sees its role as being the narrow objective of taming inflation and are less concerned about economic growth and job creation.
The baffling aspect of this decision is that even if we accept that Reserve Bank’s role is to target inflation, the numbers in
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