Most rich countries have found they like a 2% target, but emerging markets have used other sizes, often 3% or 4%. More recently, critics of monetary policy here in South Africa have flipped by 180 degrees. The SARB was originally accused of wrongly importing a first-world policy to South Africa.
But now we are told to follow major advanced economies and launch a big Quantitative Easing (QE) programme. So much for the claim that richcountry policies don’t work in developing countries! This brings me to the next part of my speech, which is about new challenges to inflation targeting. In South Africa, there is a surprising amount of interest in QE.