Lesetja Kganyago: Reflections of macroeconomic policy since 1995, from NICE to VICE – and back again?

Address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the Centre for Education in Economics (CEEF) Africa, Johannesburg, 28 September 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good evening

Thank you for inviting me to speak today. This is an unusually challenging moment for the global macroeconomy. Who would have believed, even a year or two back, that US inflation would be at 8.3%, that euro area inflation would be at 9.1%, or that UK inflation would be at 9.9%? Who would have thought that major central banks would be raising interest rates at the fastest pace in a generation? Or that the euro and the British pound would be at parity with the dollar?

Just over a decade ago, it was common to talk about a Great Moderation in global macroeconomic conditions. Mervyn King, a former Bank of England Governor, called it the NICE period: an acronym for Non-Inflationary, Consistently Expansionary. Today it would be more appropriate to talk about VICE: a Volatile, Inflationary and Contractionary Economy.