Governor Kganyago Says Many Gov'ts Faced Protests Over Inflation But Not High Interest Rates

In the opening remarks at an event hosted by the Wits University, SARB Governor Lesetja Kganyago said that "many governments, including ours, faced mass protests against high inflation (and not high interest rates)" as he outlined the key lessons from the COVID-19 crisis.

• "Policy rates increased quickly as central banks realised that what was thought to be the transitory inflationary shocks are not so transitory and there are strong second round effects. Despite the increases, policy rates in many countries, including South Africa, remain below neutral interest rates and in some cases, they are negative."
• "Increasingly central banks are being asked to address problems that fall directly under the domain of government, without consideration under what conditions and how central banks are effective in achieving their goals."
• "If you want for the South African Reserve Bank to address the unemployment crisis, then you need to give us the tools to address things such as high firing and hiring costs or the large number of unskilled workers."
• "The focus of central banks should be to deliver on their core mandates and create the space for government policies to drive structural changes."
• Click here to see the full speech.