difficult to estimate, in part because the relevant data are incomplete. as policymakers, we usually find that other measures, such as the output gap and capacity utilisation, are more useful. nonetheless, our best estimate of the nairu rate is in the region of 25 %. 6 this is a very high level. in the us, where the concept is heavily used, the corresponding number is currently estimated at around 4. 6 %. 7 the difference between the two is explained by the structural factors i alluded to earlier. one of these factors is spatial patterns. many south africans do not live close enough to where the job opportunities are. another factor is skills constraints. employers would like to hire people but cannot find people with the skills they need. 8 high unemployment is also affected by the design of our labour market institutions, which tend to penalise small businesses and favour larger firms. 9 looser monetary policies will not get our people bachelor of science degrees or move their residences closer to where the job opportunities are. nor will lower interest rates reform our labour markets. the scope for reducing unemployment through monetary policy is therefore much smaller than its proponents perhaps imagine. for all those reasons, the difference that a dual mandate would make for the central bank would probably also be small. consider how the fed implements its dual mandate. it sets out a goal for inflation, which it specifies as 2 %. this goal is fixed over time : there is no policy of aiming for higher inflation when unemployment is high, or vice versa. see ‘ estimating a time - varying phillip ’ s curve for south africa ’, south african reserve bank working paper 16 ( 05 ), by a kabundi, e schaling and m some, published in may 2016 ( http : / / www. resbank. co. za / lists / news % 20and % 20publications / attachments / 7277 / wp1605. pdf ). this is according to congressional budget office estimates of the short - term natural rate of unemployment, available from the fred database ( https : / / fred. stlouisfed. org / series / nroust ). see redi3x3 conference : policies for inclusive growth by m leibbrandt and p green, published in february 2017 ( http : / / www. econ3x3. org / sites / default / files / articles / leibbrandt % 20 % 26 % 20green % 2020

/ bernanke20060224a. htm ). see, for instance, ‘ a revised quarterly projection model for south africa ’, south african reserve bank working paper 15 ( 3 ), by s de jager, m johnston and r steinbach, published in august 2015 ( https : / / www. resbank. co. za / lists / news % 20and % 20publications / attachments / 6839 / wp1503. pdf ). page 9 of 12 high economic costs to reverse earlier policy mistakes. such policies tend to exacerbate inequality and deepen poverty. by contrast, when monetary policy starts with a strong commitment to price stability ( which is the case with inflation targeting ), it can also offer other benefits. a credible monetary policy can be more flexible, meaning it can do more about any short - term deviations of employment and output from natural rates. a credible monetary policy can also keep borrowing costs lower than they would otherwise be. this is a central benefit to long - term economic growth and job creation. when inflation rises and stays high, investment decisions are distorted towards short - term investments that carry with them short - term jobs. for this reason, low inflation is a sound developmental policy. it encourages firms across the private and public sectors to make long - term investment decisions that imply productivity growth over time. this is critical, indeed a prerequisite, for sustainable jobs and income growth. critics often miss the fact that monetary policy is about creating a healthy long - run environment for investment and consumption, where inflation is predictable and purchasing power is protected. they just want us to cut interest rates, in part because they equate long - run economic growth with household consumption. they think a good decision is a cut of 25 basis points and a better decision is a bigger cut. unfortunately, this does not always work out well. household debt rises if productivity and incomes do not also increase, and this boom eventually turns into a bust, with marginal workers getting hurt the most. consumption based on rising debt levels cannot be a sustainable growth and development strategy. growth and development can be built on a low inflation and low interest rate strategy but, as i have emphasised, they need to go together. individual interest rate decisions can be difficult, and we often have vigorous debates in mpc meetings about the exact policy stance. at times, different people will favour a somewhat higher or lower repo rate. we all agree,