First, asset price bubbles are hard to identify on a real time basis, and the fundamental factors that drive asset prices are not directly observable. A central bank should not therefore second guess the market. Second, monetary policy is too blunt an instrument to counteract asset price booms. And third, central banks can “clean up the mess” after the bubble bursts.
This year we introduced a hybrid approach, something we hope to continue to do going forward. We are pleased that 225 schools attended the briefing sessions for learners and teachers, and 102 schools submitted essays that are required to proceed to the next level of the competition. These essays are prepared in the same format as the SARB MPC statement.