They rightly wanted the repo rate to go up by 15-20 basis points because
- year-on-year inflation is already higher than it should be and soon hovering between 5% and 6%
- inflation hits the poor harder
- the latest household budget survey shows that economic growth of the last five years has not been inclusive
No one in her right mind can disagree with these facts. A few comments on them:
- one former Governor likened inflation to radioactivity
- South Africa has calculated that the inflation that hits the poor is 3% higher
- as expected the flat tax disease has operated like a reverse Robin Hood
Furthermore even the JEC -- not exactly the source of the most progressive economic statements since dinosaurs were wiped out from the face of the earth -- asked that the repo be left unchanged.
How can you then explain that the Financial Secretary asked for 50 basis-point cut? And that the MPC ended up lowering the key rate by 25 basis points?
Simple: there are way too many people on the MPC and at the Ministry of Finance who don't seem to understand the scope of an MPC. That's unacceptable. Because I am sure that the cost of running the MPC is nothing to be sneezed at. We should be able to count on Mr. Alan Ganoo to find that out for us. And to apply parliamentary pressure so that the MPC works for most of us.
