Business Day article "Monetary policy cannot solve jobs crisis – Marcus"
In a report in the Business Day of 7 March, the Governor [of the Reserve Bank, Gill Marcus] was quoted as having said that the anticipated breach of the inflation target this year is expected to be short-lived and that “we are confident it will be reversed within a short period.
This quote was incorrect and misleading. In fact, the Governor was asked to comment on past breaches of the target, and her written response was as follows: “The short-lived breach of the target in 2013 was expected, and we were confident that it would be reversed within a short period. The breach was also expected by the markets to be temporary, and therefore had very little adverse impact on inflation expectations. We therefore felt it was appropriate to keep the monetary policy stance unchanged.”
In our recent Monetary Policy statement in January, we noted that expected breach of the target in 2014/5 was expected to be of a longer duration, of around 4-5 quarters, with an upside risk. The extent and duration of the expected deviation from the target was an important consideration in our recent monetary policy decision.
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