In the new framework, we would be able to analyse variables and events incorporated in the inflation-targeting models as well as variables and events not explicitly incorporated in the inflation-targeting models, such as bad debts in the banking industry, but which are also important for the maintenance of financial stability.
In this regard, we have been watching the effects of the liquidation of Macmed with interest. For today, given that my audience is concerned with long-term investment portfolios, I shall discuss an issue which appears to be something of a favourite topic among South Africa’s investment analysts - the term structure of interest rates, or the yield curve.