"Inflation targeting is the best route for an emerging market" - economist

The Business Day on Tuesday reported that Deputy Finance Minister, Sfiso Bhuthelezi said during a presentation, that the issue of inflation targeting should be opened up for debate after the Public Protector, Advocate Busisiwe Mkhwebane said in a finding last week that the Reserve Bank’s mandate should be changed.

Chief economist at Argon Asset Management, Dr. Thabi Leoka doesn't agree with the deputy finance minister, adding that research on inflation targeting shows inflation has been contained post 2000.

There is also this debate on whether inflation targeting benefits or impacts growth and it certainly does. I don't think that you can look at inflation targeting without growth consideration.

Dr. Thabi Leoka, Chief economist at Argon Asset Management

Inflation targeting is the best route for an emerging market.

Dr. Thabi Leoka, Chief economist at Argon Asset Management

Targeting inflation is not rare says Leoka. She says most Reserve banks, especially since the financial crises, have taken on a secondary mandate that is growth, adding that growth is an important consideration in inflation targeting.

If the mandate in South Africa was changed, there would be a significant deterioration in inflation, adds Leoka.

The Reserve Bank has done a stellar job in containing inflation.

Dr. Thabi Leoka, Chief economist at Argon Asset Management

Listen to the audio below for more:


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