DANGEROUS GAMES
When will Kganyago slash interest rates?
The Reserve Bank is the latest institution to come under attack in the battle to capture the state — but it cannot be allowed to fall
No-one could envy Reserve Bank governor Lesetja Kganyago right now. Falling inflation and collapsing growth make a compelling case for an interest rate cut, but growing political instability is raising the risks to the rand. To complicate matters, the Bank is the object of a new front that has opened up in the battle to capture state institutions. The first salvo was fired by public protector Busisiwe Mkhwebane when she ordered parliament to amend the constitution to replace the Bank’s inflation-targeting mandate with one that puts growth and transformation front and centre.The second salvo was more serious, coming from deputy finance minister Sfiso Buthelezi. He said last week that inflation targeting is bad for emerging economies such as SA and should be up for debate, adding: “The role of the Reserve Bank is a contested space.” Buthelezi’s curve ball in particular has set the financial community’s teeth on edge, given that it adds to the extreme political and policy contestation ...
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