Hawkish Reserve Bank sees South Africa edge towards a rates hike - Analysts say the Reserve Bank could start tightening monetary policy as early as next month
, said the trade union federation would not support the Reserve Bank raising interest rates, especially with the economy still in a recession.
In a public lecture he delivered in September, Kganyago said the Reserve Bank’s inflation-targeting is more flexible than critics claim. “It doesn’t require the central bank to cancel out every price shock using interest rates, or to have perfect forecasts,” he said. “Our labour market is so dysfunctional, this excuse would rule out ever raising rates — a policy that would leave us in the worst-case scenario of high unemployment and high inflation.”
The Reserve Bank’s 4.5% midpoint target is not low compared to the targets of its emerging market peers, Schoeman noted.
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