Related Articles
Top Stories
Feb 13 2012 12:15
Miner Xstrata says it has brought forward maintenance on two furnaces to assist Eskom to save power.
Feb 13 2012 10:43
Although jobs were created, the economy is still 420 000 jobs short of the peak employment level before the 2009 global financial crisis, says Adcorp.
Feb 13 2012 07:58
Greek lawmakers have approved a new round of drastic austerity measures after a long day of street battles between police and protesters left dozens injured.
Johannesburg - South Africa's inflation targeting guidelines will remain the framework of monetary policy, Finance Minister Pravin Gordhan said in a written reply to parliament on Friday.
The policy of targeting inflation has been a contentious issue between the ruling ANC and its allies, labour federation Cosatu and the communist party, who want the policy abandoned.
Answering a question posed in parliament, Gordhan said: "Yes. Inflation targeting remains the framework for monetary policy in South Africa".
"Inflation targeting provides a clear nominal anchor for monetary policy and requires the Reserve Bank to be transparent about its goals and actions. These issues are extremely important for policy credibility and for managing inflation expectations effectively," he said.
Inflation has slowed gradually since peaking close to 14% in August last year. Annual headline CPI stood at 6.1 percent in September, staying outside the central bank's target band of between 3 and 6 percent since April 2007.
In response to slowing inflation and in an effort to stimulate an economy that is languishing in its first recession since 1992, the central bank has cut interest rates by 500 basis points since December.
The bank will start its monetary policy meeting on Monday, the first to be chaired by new Governor Gill Marcus, who is seen in some circles as close to the unions.
When she announces the bank's decision on Tuesday, Marcus is largely expected to continue with the policies of the central bank, and leave the repo rate unchanged at 7.0 percent.
Pressure from left
President Jacob Zuma ascended to the top post in the country with strong support of the leftist allies of the ANC, who are now wanting to see economic policies shift to the left.
The government has repeatedly promised to "discuss" policy issues with its leftist allies without comitting to substantive changes, a stance Gordhan reiterated on Friday.
"As with all areas of public policy, debate on the merits and shortcomings of different policies is important to ensure that higher sustainable rates of growth and employment."
"I welcome public debate on this issue, and have agreed with the Governor of the Reserve Bank that monetary policy must support our aim of balanced and sustainable growth." he said.
The ANC is meeting with its allies over the weekend but it has suggested it won't cave in to pressure from Cosatu and the South Africa Communist Party.
- Reuters