Expectations of higher inflation in the future affected the public’s behavior – workers demanded raises, and businesses set prices and otherwise acted in anticipation of higher costs – and this helped fuel actual inflation. The FOMC’s occasional efforts to reduce inflation in the 1970s were ineffective partly due to the expectation that it ultimately wouldn’t do enough.
The SARB managed the resolution of African Bank Limited in a speedily and decisive manner, limiting the potential risk of contagion to the rest of the banking sector.