Fair skies greet new BoB governor

Prevailing low inflation

Pelaelo’s predecessor wrestled with the various cycles of inflation during her 17-year tenure as governor, famously raising the bank rate to its highest (16.5%) in January 2009 amidst spiralling inflation. Linah Mohohlo was panned by critics for her austerity prior to the global recession and thereafter, for not doing nearly enough to support recovery through monetary policy. Meanwhile, inflation was at record lows (2.7 percent) when Pelaelo assumed office in October and has since averaged 3.1 percent in the months to April. Prior to his ascension, inflation had trended within the target three to six percent threshold since June 2013. As Mohohlo and Pelaelo have both said, the low inflation is due largely to “subdued domestic demand, against the background of sluggish economic activity and restrained growth in personal incomes”.