Kganyago: Opportunity for permanently lower inflation, interest rates

Kganyago: Opportunity for permanently lower inflation, interest rates

Reserve Bank Governor Lesetja Kganyago says South Africa has an opportunity to achieve permanently lower inflation and interest rates.

Lesetja Kganyago s
AFP

Kganyago gave a lecture on Thursday on how the central bank moved inflation to 4.5 per cent and what it cost.

 

Speaking at the University of Stellenbosch, he said that since 2017, they have aimed for the middle of their inflation target range.

 

"This experience demonstrated some lessons that remain important today. These are lessons about the costs of lower inflation, about structural factors like high administered prices, and about the role of monetary policy in shaping trend inflation. "


READ: Debt struggles persist despite rate cut, lower inflation - DebtBusters

 

Kganyago says the issue of administered prices is often misrepresented.

 

"Yes, administered price inflation is too high and damaging for the economy. Yes, if it were lower, that would help deliver lower inflation and lower interest rates. 


"But administered prices are also responsive to economy-wide inflation, and they are not such a large part of the basket that disinflation can only be achieved by forcing everyone else into deflation."


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