HILARY JOFFE: We need the Reserve Bank's thinking, not just its decisions

19 January 2020 - 08:25

Avery long time ago, when SA's inflation targeting policy was in its infancy, I was summoned with a Business Day colleague to the office of the eighth governor of the Reserve Bank (as he likes to be styled), Tito Mboweni. We came out of the meeting with a front-page story about the governor signalling that things had changed since the previous meeting of the Bank's monetary policy committee (MPC) - which suggested the market might have it wrong about what the committee would decide at its next meeting.

I can't remember what the economists' forecasts had been; the point was that Mboweni took the trouble to manage expectations. Times have changed and the Bank surely wouldn't do it that way now. But successive governors have worked hard, since SA's introduction of inflation targeting two decades ago, to improve communication and make monetary policy ever more transparent and predictable - the essence of good monetary policy. The fact that this week's interest rate cut - while welcome - came as such a surprise to the market is a concern, raising questions about Bank communications...

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