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Pretoria - SA Reserve Bank (Sarb) governor Gill Marcus has defended the government's policy of inflation targeting, arguing that it protects the value of the rand.
"The core mandate of the central bank is price stability. The additional mandate is financial stability, and a whole of other things in between," Marcus told delegates at the release of the monetary policy review (MPR) on Tuesday.
"It [inflation targeting] is a tool to influence expectations," she said.
Marcus said the bank’s expectations of inflation were reasonably anchored around the upper level of its target band.
Sarb aims to contain inflation to between the 3% and 6% range.
"If we simply have high inflation, it is not going to help this economy," she said.
"Containing inflation protects the value of the rand in your pocket. We know we have a lot of very poor people, and we want to make sure that the rand in their pocket has value today and tomorrow."
A delegate had asked the governor if Sarb should change its policy, as the system was adopted during economic conditions which differed from those the country presently faced.
Marcus said the country needed cohesion of policy.
She said all South Africans had a role to play in creating positive sentiment about the country.
"It’s not about pointing fingers at everybody else. It’s about all of us.
"The points being made about the challenge of growth and inflation: we can influence both."
Marcus said the problem with the strikes in South Africa was that they were violent, and this affected sentiment.
She urged South Africans to deal with the structural issues which were the causes of unemployment and low economic growth.
