South African economic policies will not change simply because there was a new head of the central bank, the ruling ANC said on Monday, dismissing fears inflation targeting will be scrapped.
Policy was set up the party and government and not an individual, Gwede Mantashe, the African National Congress Secretary-General, told reporters.
Outgoing Governor Tito Mboweni later stressed on 702 radio station that interest rate decisions were not taken by the governor alone, but by the bank’s policy committee.
President Jacob Zuma on Sunday appointed Gill Marcus — a former deputy governor and head of banking group Absa — as Governor of the central bank from November 9, succeeding Mboweni, who declined a third 5-year term.
The move has broadly been welcomed by investors although some analysts have raised questions over whether the government was bowing to pressure from trade union allies, who were critical of Mboweni and the inflation targets monetary policy tried to attain.
“Policy is not a function of an individual,” Mantashe said.
“Gill Marcus is going to implement the policies that are there. She is appointed the governor of the Reserve Bank and she will find policy there.”
Mboweni was respected by investors for efforts to keep inflation in check but has come under criticism from the ANC’s trade union and communist party allies for what they saw as overly tight monetary policy.
Labour federation COSATU have demanded inflation targeting be scrapped. Finance Minister Pravin Gordhan has said targeting would be debated but has stressed it remains in place.
Mantashe said the current policy of the central bank remained in place and could only change if there was a decision to do so at an ANC national conference.
“In the ANC we take very long to make changes in policy because we subject them to processes. It is not because an individual has changed that there is the freedom to change policy, it does not work like that.”
Zuma on Sunday praised Mboweni and the central bank, adding the country’s policies had helped cushion the impact of the global slowdown.
“During Mr Mboweni’s tenure, the Reserve Bank has undertaken its constitutional mandate with diligence and prudence,” he said.
“It has made a critical contribution to the country’s sustained economic stability and has pursued monetary policies that have fostered economic growth.”
COSATU has demanded lower interest rates but the central bank decided to keep its repo rate steady at 7.5 percent last month, citing concerns about inflation.
It has cut the repo rate by 450 basis points since December, despite inflation remaining outside the 3 to 6 percent band.
Mboweni said that Marcus would join the central bank as his advisor in October to allow a month to hand over the top post to her.
On economic issues, he repeated that while the domestic economy remained under stress, there was a possibility of an uptick in the global economy in 2010.
The central bank had to keep its focus on keeping inflation low and the new leadership had to work to ensure than “proper decisions” were made.
He also said interest rate decision were not taken by the governor alone and called on “some in our society” to stop personalising the decisions of the seven-member monetary policy committee.
“They are part and parcel of a collective decision by the monetary policy committee. So Ms Marcus won’t be making decisions on her own. I did not make these decisions on my own.”