The strong rand has curbed the effects of oil and food prices on inflation, according to Monde Mnyande, chief economist and adviser to the governor of the South African Reserve Bank (SARB), who was speaking on Tuesday in Midrand, outside Johannesburg, at a briefing held by the Institute for Futures Research.
He added that there were no lasting benefits in embracing inflation.
“It has been agreed by most that stable monetary policy and the subsequent price and financial stability achieved through inflation targeting is a prerequisite for long-term economic growth with less cyclical volatility,” he added.
Mnyande said the world had changed tremendously over the past two decades.
Double-digit rates of inflation were common in the 1970s and 1980s but discipline was restored as far as inflation was concerned.
“SA was fortunate to be part of that more disciplined process.”
Mnyande added that the world of low inflation was also the world of lower nominal interest rates.
“And low inflation is in the interest of sustainable quality growth and development. What the SA Reserve Bank does when combating inflation is necessary in order to have a strong platform from which growth and job creation can take off materially and gain momentum.” — I-Net Bridge