RESERVE BANK INDEPENDENCE
Lesetja Kganyago: Inflation targeting is the only way to bolster the economy
Reserve Bank governor Lesetja Kganyago mounted a strong defence of the institution’s independence, saying the only way it can help lower the cost of capital to support economic growth is by controlling inflation as stated in its constitutionally protected mandate. "Monetary policy brings down the cost of capital by reducing inflation, even for the government," he said in an interview with Business Day on Friday, the day after the central bank decided to keep its repo rate unchanged at 6.5%. "As long as inflation is high, government will pay more for its borrowing activities. High inflation leads to a high cost of capital." The Bank’s decision prompted a farce from Luthuli House when ANC spokesperson Phelisa Nkomo, who has since been banned from speaking on the economy, issued a statement imploring the monetary policy committee (MPC) to "prioritise the plight of poor South Africans". Those comments were later disowned by the ANC’s economic policy head, Enoch Godongwana, who affirmed ...
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