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Johannesburg – No president or finance minister can influence the South African Reserve Bank (SARB) monetary policy committee (MPC), according to governor Lesetja Kganyago.
During a question and answer session following the repo rate announcement on Thursday, Kganyago said that the Reserve Bank was not pressured to introduce a rate cut.
The MPC was in favour of a rate cut of 25 basis points to 6.75 basis points, given the “improved inflation outlook and the deteriorated growth outlook,” said Kganyago.
When asked if the Reserve Bank was concerned about its credibility, Kganyago said that it is not concern. “We earned our credibility and we will protect it. We have a constitutional duty to protect the value of the currency.”
Kganyago said the bank was aware of the fact that if it were to lose its credibility then it will take a long time to regain it.
He added that the Reserve Bank’s independence is not under threat. But he explained that noise was generated after the Public Protector Busisiwe Mkhwebane announced remedial action to have the mandate changed. This noise creates uncertainty and that is not what South Africa “is looking for” he said.
“The independence of the Reserve Bank was enshrined in the interim Constitution,” he said. When the Constitution was adopted it was subject to the Constitutional court to ensure it remained consistent. Whatever changes to be made must be consistent with the original Constitutional principles that have been laid out, he explained.
The Reserve Bank is challenging the remedial action at the courts, on the basis that it falls outside of her powers and that the remedial action did not follow fair process, among other reasons.
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