Quote from Max's column: "I've never understood the logic of making people pay more for the same things in order to combat inflation. Surely inflation would go down if people spent less and saved more? " The idea, as I understand it, is to lift the rate high enough to discourage people from borrowing - if the rate was lifted quickly early on less folks would have borrowed and there would be less rate increases later. If anything, now its too little too late. Modern economics debates this though - leading to another Quote: "Flies in the face of analysis Well, it seems I'm in good company. Professor Joubert Botha, former professor of economics at Wits and past president of the Economics Society of South Africa, declared in an open letter to the Reserve Bank this week that the belief that there was a direct relationship between prices and the interest rate "flies in the face of two centuries of economic analysis by the founding fathers of monetary economics". Botha believes external factors are too strong for the Reserve Bank to reduce price levels. But if anything is to be done, it would be through controlling the credit banks can give." Which is partly what the NCA is supposed to acheive. i.e. reduce borrowing What isn't mentioned in this article is outside driving forces which are outside Titos control: 1. The one most people know - The fuel price (although, I agree, the tax can be reduced because they are over recovering hugely on that at the moment) 2. Raw materials cost. e.g. Steel in the spread that I use has gone up 73% since february and I've just had a notification there is another 5%+ increase due for July so over 6 months, that will be 82% (yes 5% on 73% IS 82% before you question the maths). etc etc Investor confidence isn't high either with the likes of Eskom screwing up royally, the crime and gereral lack of service delivery by many government department. So foreign investent isn't as high as some might expect with high interest rates With factors like above how can anyone really expect there not to be huge inflation In a nut shell, like just about everyone, I don't like the rate increases, but I don't think we should be blaming Tito - he's the poor bastard that has to make a crappy decision and pick up the pieces from problems caused by others. (If anything, he and Trevor are two of the top performers in our otherwise underperforming government)