It's important for the country to have inflation targeting and for the Reserve Bank to continue to deal with it, Reserve Bank governor Lesetja Kganyago reportedly said on Monday. According to Business Day, Kganyago was giving the keynote address at a Centre for Education in Economics and Finance Africa dinner.
Also on Monday, Public Protector Busisiwe Mkhwebane released her report on Absa, recommending that the bank to pay back R1,125 billion related to an apartheid era bailout received by Bankorp, which later became part of Absa.
Absa reportedly said it was considering legal action. The bank said: "We have not yet received a copy of the report and we are urgently requesting the Public Protector's Office to send it to us. Once we have read it we will consider our legal options including seeking a High Court review."
Mkhwebane also recommended that Parliament should amend the Constitution to change the mandate of the Reserve Bank, in a move which would effectively end inflation targeting.
Currently, the Constitution says the primary objective of the Bank is to protect the value of the currency in the interests of balanced and sustainable economic growth.
Mkhwebane wants this to be changed to say:
"The primary object of the Reserve Bank is to promote balanced and sustainable economic growth in the republic while ensuring that socio-economic wellbeing of the citizens is protected."
But Kganyago reportedly said: "If we can keep inflation lower, anchoring inflation expectations, that should in turn generate a lower rate of interest to support the economy. We will continue to honour our constitutional mandate and the trust placed in us by South African society."
According to Business Day, he said low levels of confidence in the country were worrying.
"Now the global economy looks as healthy as it has in years but the South African economy is still struggling... Our fundamental problem is confidence," he reportedly said.