JOHANNESBURG, March 5 (Reuters) – South Africa’s
Reserve Bank is aware that inflation targeting must be pursued
with economic growth in mind so there is no need for a
discussion of the central bank’s mandate, a senior official from
the ruling ANC party said on Monday.
A local paper reported on Sunday the ANC was mulling reforms
to the constitution which would include changing the central
bank’s powers and its price stability mandate, with some party
members calling for the inflation targeting strategy to be
scrapped.
The ANC’s powerful labour union allies have in the past
accused the Reserve Bank of pursuing its target of keeping
inflation within a 3-6 percent target, without considering the
negative impact of relatively high interest rates on economic
growth and subsequently unemployment.
On Monday Enoch Godongwana, a member of the ANC’s
decision-making national executive committee and head of its
economic transformation committee (ETC), said Finance Minister
Pravin Gordhan had made clear the Bank must take into account
key issues like unemployment.
“The reason why within the ETC we have not pursued that
discussion (on inflation targeting) is precisely because the
Minister of Finance … and the Reserve Bank have dealt with
that matter to the satisfaction of everybody else,” Godongwana
told a media briefing.
“We have felt that there’s no reason to pursue the
discussion anymore, so it’s not contained in any of our
documents at the moment.”
The ANC, which holds a policy-setting conference in June, is
due to release draft policy discussion documents to its branches
on Monday. Proposals in the discussion papers would have to be
adopted at another conference in December to shape government
policy.
The Reserve Bank slashed rates by 650 basis points in the
two years to November 2010 to help the economy recover from a
recession. Analysts see rates remaining at three-decade lows
this year to help growth, despite inflation having pierced the
upper end of its target band.
(Reporting by Stella Mapenzauswa; editing by Anna Willard)
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