Cape Town – Finance Minister Enoch Godongwana has reportedly rejected a call from some members of the ruling ANC to pressure the central bank into using alternative measures instead of raising interest rates to control inflation.
According to Bloomberg News, the ANC had urged Godongwana to engage in urgent discussions with the South African Reserve Bank (SARB) to address rising living costs without resorting to rate hikes.
However, Godongwana emphasised the central bank’s independence and stated that he was not discussing the matter with the SARB.
“I’m not in discussion with the central bank on that matter.
“The central bank in South Africa, by Constitution, is independent and its purpose is defined as that of protecting the value of the currency in the interests of balanced growth,” the report quoted Godongwana as saying during an interview at a meeting of Group of 20 finance chiefs in Gandhinagar, India.
The ANC’s push for alternative measures was driven by concerns over weak economic growth, high unemployment, and increasing inequality ahead of upcoming presidential elections.
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The SARB has been gradually raising interest rates in response to inflation persistently exceeding its target range.
Economists expect a 25 basis point rate hike in the upcoming decision.
Godongwana acknowledged that the finance minister was required to consult with the reserve bank but emphasised that he could not dictate its actions.
Godongwana engages in meetings with Lesetja Kganyago, the Governor of the reserve bank, to put forth proposals regarding policy direction, BusinessTech reported.
Although the ANC has previously expressed the need to expand the central bank’s mandate in order to strengthen the economy, the party has affirmed its dedication to safeguarding the bank’s independence.
Kganyago previously highlighted that high inflation disproportionately affects the poor and emphasised the importance of price stability for reducing borrowing costs.
Godongwana also mentioned that frequent power outages were expected to lead to a downward revision of the country’s economic growth forecast.
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Compiled by Betha Madhomu
