State 'must help meet inflation goal'

Tamlyn Stewart

Tamlyn Stewart

Reserve Bank governor Tito Mboweni said yesterday that everyone needs to do their bit to help contain inflation - including government.

Speaking at Wits University Mboweni defended the Monetary Policy Committee's (MPC) policy of inflation targeting. "The advantage of inflation targeting is that it is easily understood, it is publicly announced and it enhances the transparency of monetary policy," he said.

He added that publicly announcing the inflation target enhanced coordination and cooperation between the central bank and government.

"Government has to do its bit to achieve the inflation target.

"It doesn't help if government is doing the opposite. It doesn't help if there are unsustainable rates increases in electricity tariffs, or unsustainable increases in education costs," he said.

Mboweni said inflation targeting was forward-looking and that therefore the MPC was not necessarily influenced by the latest inflation number, but rather by the likely inflation outlook.

"Recently we have had inflation disappointments in the country - we have high food prices now. Clearly we are very concerned about this situation so all of us have to do our bit to bring inflation back within the target range in the medium- term," he said.