31/08/2017 06:13 SAST | Updated 31/08/2017 06:14 SAST

Kganyago: Leave Reserve Bank's Mandate, Independence Alone.

The Reserve Bank governor says rethinking monetary policy is 'misguided'.

SA Reserve Bank governor Lesetja Kganyago. 
REUTERS/Siphiwe Sibeko
Siphiwe Sibeko / Reuters
SA Reserve Bank governor Lesetja Kganyago. REUTERS/Siphiwe Sibeko

Reserve Bank governor Lesetja Kganyago has defended the bank's mandate and reiterated the view that it should maintain its independence, Business Day reported on Thursday.

At a public lecture at the Unisa Graduate School of Business Leadership on Wednesday, Kganyago reportedly said that questions around the mandate of the bank were not based on fact.

The Public Protector previously called for the bank's mandate to be changed, although this was later retracted.

This week, ANC presidential hopeful Nkosazana Dlamini-Zuma joined the chorus of ANC voices calling for the nationalisation of the Reserve Bank.

"Independence needs to be earned. It's not enough for it to be enshrined in the Constitution. The economic argument is crucial for assessing our effectiveness — and for understanding why the SARB should be independent," said Kganyago.

"... In our current economic environment, rethinking monetary policy is not the best use of our time."

"The ratings agencies tell us that the major policy pillar that supports the South African investment case is our monetary policy framework.. Why then would you want to have a conversation about changing the monetary policy framework? As a matter of policy, this seems misguided."

He defended the use of inflation targeting.

"I think inflation targeting makes sense for South Africa as it helps to uphold our constitutional duty to uphold the value of the rand," Kganyago said.

"There is no distinction, and hence no choice to be made, between protecting the value of the currency and attending to the socioeconomic well-being of South Africans."

But Kganyago also said that the bank's 3-6% inflation target could be lower, according to MoneyWeb.

"A frank reassessment of the 3-6% inflation target range, which is now almost 18-years-old, would probably conclude that the target should be lower. My economists have worked on the numbers, and they report that if we want an inflation rate in line with our trading partners, we should be aiming for 3-4%, that is not where we are today," he said.