Marcus 'an enemy of inflation'

Johannesburg - Head of research at the South African Reserve Bank (Sarb), Dr Johan van den Heever, said Governor-elect Gill Marcus will be an enemy of inflation when she takes over on November 9.

Van den Heever said Marcus's appointment received a positive reception internally at Sarb. He had worked with her before during her five-year tenure as Deputy Governor.

"She's extremely conservative and dedicated and takes no nonsense," he said during a Sanlam symposium in Midrand on Wednesday afternoon.

"She will be a friend of stability and an enemy of inflation," said Van den Heever. "She will have a feel about promoting stability," he added.

Van den Heever noted Marcus is in the fortunate position of having seen the troubles in the banking system in the early 2000's.

"She is very well equipped for the task," he said.

Van den Heever said Marcus will probably be happy to engage in the debate on inflation targeting. He said Sarb is, in fact, encouraged to engage with groupings across the country on this topic.

"There are some people with a short-term agenda," he said, but added that it is a "misguided" question to ask for the scrapping of inflation targeting.

He noted Sarb has a broad mandate to work against inflation and "no one can get around that".

"Whether it is inflation targeting or a more general policy is another story," he added.

But Van den Heever said since the 1970's, finance ministers and central bank governors in South Africa have been stressing the need to work against inflation.

He said while the broad principle has always been there, the key is that there is a transparent target. "You know what you're in for when there is transparent target," he said.

He conceded that SA has been outside of the target band for a while, but said a target does not mean you need to get into it immediately as there is about an 18-month lag in this regard.

- I-Net Bridge