Johannesburg - Economists are anticipating it'll be "business as usual" when Gill Marcus takes the hot seat of South Africa's Reserve Bank from Monday.
Marcus takes over as governor from Tito Mboweni. She has already spent a month at the bank in an advisory role.
Marcus' appointment has prompted media speculation about how she will deal with labour demands to loosen monetary policy further, as well as the central bank's independence, and the question of the country's general monetary policy regime.
The consensus among commentators is that there will probably be no change to the running of South Africa's monetary policy in the first year of Marcus' term.
"I believe that one of the first things Ms Marcus will do is to reassure us that the policy environment will stay as it is," said Kevin Lings, chief economist at Stanlib.
Jeff Gable, macro-strategist at Absa Capital, said it would be impossible to say to what extent change of leadership affected the Reserve Bank's decison interest rates in November or December.
Gable said that one of the challenges that Marcus would deal with was the need to de-personalise monetary policy in South Africa.
Marcus' predecessor, Tito Mboweni, became the effective face of monetary policy in South Africa during his term as governor. In the process, he also attracted harsh criticism for his firm adherence to strict monetary control.
"The reality is that the monetary policy is determined collectively by the institution and a strong monetary policy committee," said Gable.
Marcus' appointment as central bank head comes at a time when monetary policy in South Africa - and specifically the inflation targeting regime - has come under attack from the ruling ANC party's left-leaning allies.
Cosatu, which represents the country's trade unions, and the South African Communist Party (SACP) have both repeatedly called for an abandonment of inflation targeting. They have said that this policy has contributed to additional distress of South Africa's poor.
The Reserve Bank progressively increased interest rates in South Africa by 500 basis points from mid-2006 to mid-2008 in an effort to curb the rate of price increase. The Reserve Bank aims to contain the country's inflation rate within a 3% to 6% target band.
Economists expect the debate on validity and nature of inflation targeting in South Africa to remain long-term and no changes to take place during the first few years of Marcus' term.
"The primary objective of inflation targeting is price stability and I don't think that is up for debate," said Jac Loubscher, chief economist at Sanlam.
He added that a shift in monetary policy's approach to inflation targeting would be a well-planned and pre-meditated process.
"Inflation targeting is a regime and I don't know if we are at a point in time where regimes should be changed," said Loubscher, referring to the general instability in the global economic environment.
Another challenge Marcus will deal with during her term is the changing relationship between the reserve bank and the government. The South African Reserve Bank is independent from the state, however it has been subject to escalating lobbying from political parties.
Lings said that one of Marcus' most immediate challenges would be to strengthen the relationship between the Reserve Bank and government while maintaining the bank's autonomy.
- Fin24.com