17 An alternative version is that low interest rates encourage financial risk-taking, which leads to crisis, depressing the economy, lowering inflation, and generating even lower interest rates. 18  In these cases, too loose monetary policy eventually causes very high debt levels that smother economic growth, or it ends up causing financial crises. I don’t think South Africa has these problems yet.
Right now, we don’t have the high inflation and high interest rates of the past, but we also don’t have the zero rates and close-to-zero inflation of the rich countries. The inflation-targeting paradigm is working pretty well. Given all the challenges facing South Africa, we should recognise that monetary policy is the last place where we should consider risky changes.