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Sarb must pursue flexible policy, ANC says

‘Without sacrificing stability, monetary policy must take into account other objectives, such as employment creation and economic growth.’

The African National Congress said the reserve bank must consider the impact of monetary policy on economic growth when it targets inflation, re-emphasising the flexible mandate the government gave the central bank almost a decade ago.

“The ANC believes that the South African Reserve Bank must pursue a flexible monetary policy regime, aligned with the objectives of the second phase of transition,” the party said in its election manifesto which was unveiled on Saturday. “Without sacrificing stability, monetary policy must take into account other objectives, such as employment creation and economic growth.”

While South Africa’s economy emerged from a recession in the third quarter, growth remains sluggish, hampered by subdued business confidence, higher taxes imposed by government in February and a tight monetary policy stance. Gross domestic product hasn’t expanded at more than 2% annually since 2013.

Reserve bank Governor Lesetja Kganyago, who has been a strong voice for the bank’s independence, has in the past reiterated that any decisions taken by the monetary policy committee will be data-dependent and focus on the bank’s primary mandate of targeting inflation at 3 to 6%. While the central bank increased its key interest rate for the first time in more than two years in November, all 16 economists in a Bloomberg survey expect the repurchase rate to remain unchanged at 6.75% on January 17.

“The ANC is not proposing tweaking the mandate of the Reserve Bank,” Enoch Godongwana, the ANC’s head of economic transformation, said Saturday. “The independence of the Reserve Bank is sacrosanct. The intention is coordination between the monetary and fiscal authorities.”

The National Treasury, which slashed its growth forecast for 2018 by half to 0.7% in October, may take a prudent stance on tax hikes this year when is unveils its budget next month as the country prepares for elections expected to take place in May.

© 2019 Bloomberg L.P

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There will be zero employment if inflation runs hyper and the economy will be a historical footnote.

Reserve banks react to whats happening, they dont cause anything to happen; they can be a useful barometer for politicians to gauge the impact of their latest idiotic fantasies and allow a quick course correction.
Can be, but of course it wont happen.
TIA, after all.

I am not sure that the statement “the flexible mandate the government gave the central bank almost a decade ago“ is quite correct – the SARB independence is “sacrosanct” in law and regulation after all?

But it would be nice if we Could actually (we can’t I know) run the kind of never-never loose monetary policy the US did for the last 8 years.

The Runt limits us – imagine our $ rate with 1% JIBAR. 18?

Why don’t they say what they want? Strong rand, weak rand or unchanged. Truth is they have no clue and are trying to sound like they are doing something useful.

ANC loves flexible things so they can keep dodging their responsibility.

“Gross domestic product hasn’t expanded at more than 2% annually since 2013.” Meanwhile back amongst the poor population the birth rate has expanded at ….. ???? Onwards to “economic transformation” we march.

For over 10 years now, we have watched the rest of the world’s go on very loose monetary policies … Chinese bank has been aggressive with cutting fractional reserve multiple times in the last 10 years … Our reserve Bank has only been rigid maybe it is part of the problem.

The world is definitely not the same … Therefore text books economics don’t apply much

The rules have changed, some players have got stronger whilst others have got weaker but the Law remains the same. “For every action there a opposite yet equal reaction”.

Vote for an idiot and an idiot will rule you.
Stike instead of work, then you will stike because you don’t have a work.

South Africans have a choice

Grow the number of jobs or grow the wages, one thing is proven you cannot have both at the same time not when 4 out of 10 people are Unemployed.

Generate more tax revenue by taxing more or get more businesses to go which will pay more tax.
Instead they seem to focused on 1000 black industrialists.

In the rest of the world we don’t know if there would have been economic growth you speak of, if loose monetary didn’t contribute after a financial crisis.

You should also try not call people idiots … We also see things diffetently and I in different positions

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