Kganyago, Mboweni back the SARB’s independence and monetary policy stance

In a joint statement released on Thursday afternoon, Finance Minister Tito Mboweni and South African Reserve Bank (SARB) governor Lesetja Kganyago, gave assurances that the finance ministry backs the independence of the SARB and would under normal circumstances not interfere “in monetary policy decision making or decisions of the SARB”.

The statement comes after newly appointed deputy finance minister David Masondo, in an interview with the Business Day, questioned whether interest rates — which are the domain of the SARB — have been set at appropriate levels.

In commenting in ongoing debates within the governing ANC regarding the SARB’s Masondo is quoted as saying: “I think the cry out there, and the reason this debate is also being raised incorrectly through a discussion on quantitative easing, is because of [the level] of interest rates…

He went on, saying: “A helpful discussion would be about the appropriateness of the stance of the current monetary policy.”

The statements from a political principal in the ministry are out of step with the delineation of roles between the finance portfolio and national treasury, which overseas fiscal and economic policy, and the SARB which is responsible for monetary policy.

Masondo’s comments follow a series of calls from politicians within and outside of the ANC, to nationalise the central bank and change its mandate.
These calls have been perceived as attacks on the bank’s independence.

In the joint statement, Mboweni and Kganyago said: “The National Treasury has always respected the independence of the SARB, and communicates when necessary on fiscal and economic policy. The Ministry of Finance would under normal circumstances not comment on the monetary policy stance or interfere in monetary policy decision making or decisions of the SARB.”

Monetary policy decisions are the role of the SARB, the statement reads, and in turn the SARB “does not comment on fiscal policy and tax matters”.

The SARB ensures that it takes full responsibility for assessing the impact that its policies have on inflation and the economic prospects of the country, the statement adds. 

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