Economic analysis allows us to synthesise information on short-term inflationary pressures from a multitude of economic indicators. Monetary analysis allows us to cross-check this information with information on medium-term inflationary pressures extracted from monetary and financial indicators. It is on this basis that we decide on the appropriate monetary policy stance and adjust interest rates accordingly. Our positive track record has endorsed our approach.
This also discouraged investment in South Africa’s natural resource industry, and has made it difficult in some instances to maintain export volume growth. Policy certainty and investor confidence have proven to be essential prerequisites for the capital formation South Africa requires for substantive export led growth.