Thabi Leoka | The fight against inflation should not be left to the Reserve Bank alone

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Thabi Leoka.
Thabi Leoka.
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The Monetary Policy Committee (MPC) raised interest rates by 50 basis points at its last meeting. The interest rate is now 4.75%, effective 20 May. The SA Reserve Bank (SARB) is in a tightening cycle; however, the MPC is guided by the banks Quarterly Projection Model, which provides broad policy guidance and, depending on high frequency data and risks, should inform the committee members on which direction and pace of rates should go.

Monetary policy models alone cannot predict the perfect global picture and central banks have increasingly had to rely on a subjective measure of risk in coming to a monetary policy decision. A decision is typically reached after many considerations which are well thought through, but the murkiness of the current global environment makes this task extremely challenging.

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