Our current account deficit, which is equal to the foreign savings that come into South Africa, is close to 4% of GDP. Almost all our peer countries borrow less. If we try to cut rates too far, despite the country risk, investors won’t have enough reason to be in South Africa. They would be better off investing in less risky places.
So we need to become less risky, to enjoy more of the benefits of low global rates. Key public-sector drivers of inflation, like the public sector wage bill and administered prices, could also help ease inflation. This is where fiscal and monetary policies need to be in sync.