If the Bank frontloads rate hikes, social discontent could deepen, creating problems for the president
If the SA Reserve Bank hikes interest rates by 50 basis points this week there will be an outcry from low-income groups. Yet even though the poor are buckling under the pressure of rising living costs the Bank will be justified in taking a scythe to rising inflation and inflation expectations.
It will bear the criticism stoically, explaining how high inflation hurts the poor and those on fixed incomes most; that keeping inflation low and stable is the best contribution it can make to SA’s prosperity; and that the higher inflation, the higher interest rates a country must have — or suffer the consequences...
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