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Interest rates

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Brommie
Frequent Contributor
As the CPI is not a reflection of the inflation rate, government should not allow the SARB to continue with their policy to adjust interest rates by inflation targeting. The SARB uses CPI calculated for urban areas as a barometer to determine inflation and to set interest rates. Most poor people reside in rural areas. The lesser income earners (70% of the population) spend most of their income on food, housing, utilities and transport. Neither is the majority of the population in the CPI calculation nor are the items which they need on a daily basis given enough weight when the CPI is calculated. Monetary policy should be changed to resolve unemployment. I am of the opinion that the persistently high unemployment rate, strong rand and de-industrialisation of our economy are due to the SARB's policy of inflation targeting. The current policy keeps interest rates far too high and is prohibiting investment for real economic growth. What do you think?
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3 REPLIES 3
CHATTYCHAT
Super Contributor
I don't think... (this famous start to a reply might be correct English, but the subtext is not open to misinterpretation).
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Vano
Regular Contributor
? The true inflation rate would be much higher than the bogus one used at the moment. Higher inflation rate equals higher interest rate, or do I have it wrong?
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Not applicable
How do you measure inflation based on battering?
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