Nobel Memorial Prize winning economist Prof Joseph Stiglitz reiterated his stance that the "rigid" application of inflation targeting by central bankers had contributed to the onset of the current economic crisis and that containing inflation needed to be balanced with other concerns, such as sustaining growth and maintaining financial stability.
It was, therefore, at times, "absurd" to place the full burden of containing such prices on interest rates. "In some cases bringing inflation down through the raising interest rates was akin to the "cure being worse than the disease", as wage inflation was brought under control at the expense of job losses.
Stiglitz's censure comes at a time when some economists, supported by South Africa's largest labour federation, the Congress of South African Trade Unions, were intensifying calls for the South African Reserve Bank (SARB) to be released from its single mandate of maintaining inflation within a target band of between 3% and 6%.
