SA’s new deputy finance minister is right: Interest rates should be lower

is misguided – the real issue is whether interest rates over the past few months have been set at the right level"The key issue for me is whether the interest rates are high.

The monetary policy committee of the Reserve Bank has been hawkish in recent years, with seven hikes since the end of 2013 – despite South Africa sinking ever deeper into trouble. After a painful recession last year,Still, the bank has not budged on rates.Source: Momentum Investments Meanwhile, the Reserve Bank's own forecasts have overestimated inflation as weaker labour costs and lower food prices have persisted for longer than anticipated, according to a report by Momentum Investments.While the market's expectations for inflation over the next two years have continued to decline, the repo rate just went up.Masondo told Business Day that the central bank's current mandate —"to protect the value of the currency [of the Republic] in the interest ..

"The current monetary policy test is: at any point in time, is the stance of monetary policy commensurate with"balanced and sustainable economic growth?"With inflation seemingly under control, some of the other traditional concerns about too-low interest rates can also be safely disregarded.

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