The inflation targeting debate

By Staff Writer

The new Minister of Finance, Pravin Gordhan, has signalled his willingness to debate the policy of inflation targeting that has lead our interest rate policy since 2002. The outcome is still uncertain, although analysts believe it will be more on the lines of tweaking current policy rather than a full scale about face. The policy has served us well so far but as the global and domestic financial outlooks change so should our policy. So what did the minister allude to us doing?

 

  • No over borrowing to boost growth
  • Spending on infrastructure
  • Prudent debt management 

Inflation targeting is seen as an investor friendly policy and the market watchers were keenly looking for a reaction in the international bond market to the announcement that Gordhan is open to debate on inflation targeting, but the reaction was minimal meaning that the international markets are so far happy with the new dispensation here in South Africa. The Government is also busy releasing a new bond designed to raise one billion dollars US to help finance our budget deficit. The government knows its budget gap is too wide, but have you planned exactly what is in your own personal budget?

The left has generally been critical of inflation targeting believing it to be more investor rather than worker friendly. However we can expect that any change implemented will be gradualist and evolutionary rather than revolutionary and that the Minister will be looking for a consensus view with regards to any changes in monetary policy. The Government is expected to pursue a more growth oriented strategy and any new policy direction would play to that.

 

Recent Articles

Featured Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Discovery Vitality: The impact it had on my health

It’s nearly 30 degrees outside, but my windows are closed to prevent further wildfire smoke from entering my bedroom. I’m hopping around, squatting and lunging my way into my “cardio zone” so that I can earn 200 points on Discovery Vitality and meet my weekly activity goals.

Read more

Rand runs out of steam in lead-up to budget speech

For all the foreshadowing that was done last week in terms of the two big speeches by the head of states in the United States (US) and South Africa (SA), very little happened as a direct consequence thereof.

Read more

The cover you need at every age and stage

Insurance is often neglected during people’s twenties and inflated during their forties. So, which insurance products should you pursue at which age?

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town