It has at times been suggested that the SARB should place greater emphasis on growth and employment objectives, or even that its mandate should be modified to make such objectives clearer. These suggestions may miss the key channels through which monetary policy best serves the goal of long-term economic development.
As chart 1 illustrates, core inflation fluctuated slightly below 1% between 2014 and early 2017, and has yet to show more convincing signs of a sustained uptick. It is good to realize that stubbornly low inflation is not just a European phenomenon.