An economy with stable inflation provides certainty, improves planning, and therefore supports consumer, business and investor confidence, which are essential in driving economic activity that facilitates growth and employment creation. Lower prices also support South Africa’s competitiveness in global trade. The inflation-targeting framework has served South Africa well. It has helped us achieve lower inflation and therefore lower interest rates.
A long series of booms and busts over the last four decades has demonstrated that asset price developments can pose serious threats to macroeconomic and price stability and therefore central banks cannot simply ignore them.