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Article: Inflation targeting a failure.(News)
- Article from:
- Daily News (South Africa)
- Article date:
- May 9, 2008
CopyrightCOPYRIGHT 2008 Independent News & Media PLC. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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I told you so. Inflation targeting is wrong for South Africa. Why? Because, as a developing country burdened with high unemployment, premature adoption of inflation targeting (IT) has been like putting a cast on a broken leg before realigning the fractured bone and thereby condemning the patient to a permanent limp.
Before IT should be considered, the most important relative price structures in a country - and critically, in the case of South Africa, the US dollar wage of the unemployed semi-skilled labour trapped in our Second Economy, the blight which represents our most "fractured bone" - needs to be more closely aligned to the equivalent clearing price ...