Lesetja Kganyago: Monetary policy and inequality - the post-pandemic experience

Guest lecture by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the University of the Free State, Faculty of Economic and Management Sciences, Bloemfontein, 15 August 2024. 

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

Good afternoon, ladies and gentlemen.

Introduction: an era of economic shocks and rising inequality

We are just a few months away from marking a fifth full year since the first case of COVID-19 was reported. This is remarkable − in part, because we still live with the economic shocks that followed the pandemic. Labour, services and goods markets were subjected to severe dislocation and strain, prices have surged, and debt levels remain very high.

The pandemic shocks impacted widely on economic growth, industrial sectors, job creation and household incomes. As they did so, they also affected the distribution of incomes, both within and between economies. China's post-pandemic slower growth rate, for instance, will sharply slow the pace of global poverty reduction. Other effects were less direct. Comorbidities, for instance, mattered greatly for households, essential workers were more at risk, gender inequities were often reinforced, and children without resources experienced larger learning losses than others.

The economic shocks of the pandemic were not a one-off. They were sequential and often overlapped, causing additional damage. In the post-pandemic inflation surge, food price shocks and supply constraints, made worse by trade restrictions and geopolitical tensions, spilled over into other prices. These seismic effects, mixed with strong policy responses, set off the worst bout of inflation since the 1980s. At the global level, consumer price inflation was 4.7% in 2021, 8.7% in 2022, and 6.7% in 2023. The International Monetary Fund's (IMF) forecast for global inflation for this year remains high, at 5.9%.