When Reserve Bank governor Lesetja Kganyago hiked interest rates by 25 basis points last week, those who were listening might have heard an audible groan from SA’s besieged middle class.
The Bank’s reasoning was that inflation had climbed to a five-year high of 5.9%, so Kganyago was only following SA’s inflation-targeting policy.
But it’s not as if the economy is so hot, and demand rising so fast, that Kganyago needed to cool the economy. That 5.9% inflation number wasn’t a perfect reflection of what is happening to market prices set in a free economy; rather, it is a number driven partly by the grasping hands of a rent-seeking state that hasn’t bothered to ask what happens when it kills the golden goose.
