In partnership with

Marcus: CPI targets reduce price pressure

Oct 30 2014 11:04

Pretoria - The South African Reserve Bank (Sarb) defended its inflation targeting policy on Thursday, saying it has helped reduce price pressures and contributed to more favourable economic growth.

Governor Gill Marcus, whose five-year term in office will end on November 8, told a conference on inflation targeting that raising its band from the current 3% to 6% would probably push the consumer price index higher.

The Reserve Bank has raised interest rates by a cumulative 75 basis points this year, as it balanced worries about inflation pushing above its target and concerns over weak growth.

"We have adopted a flexible inflation targeting approach, conscious of the trade-off between short-term inflation variability and output variability," Marcus said.

"This approach has been appropriate both in dealing with exogenous shocks, as well as responding to periods of slow growth, as is currently the case."

Labour federation Cosatu has long called for the government to scrap inflation targeting, saying it has led to higher interest rates, undermining efforts to grow the economy and create more jobs.

"This animosity is problematic, as societal buy-in and public support are considered to be important prerequisites for the successful implementation of the framework," Marcus said on Thursday.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

sarb  |  gill marcus  |  inflation  |  sa economy  |  cpi



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What toys are you buying this Christmas?

Previous results · Suggest a vote