South Africa\u2019s ruling African National Congress said the reserve bank must consider the impact of monetary policy on economic growth when it targets inflation, re-emphasizing the flexible mandate the government gave the central bank almost a decade ago.<\/p>\n
\u201cThe ANC believes that the South African Reserve Bank must pursue a flexible monetary policy regime, aligned with the objectives of the second phase of transition,\u201d the party said in its election manifesto which was unveiled on Saturday.<\/p>\n
\u201cWithout sacrificing stability, monetary policy must take into account other objectives, such as employment creation and economic growth.\u201d<\/p>\n
While South Africa\u2019s economy emerged from a recession in the third quarter, growth remains sluggish, hampered by subdued business confidence, higher taxes imposed by government in February and a tight monetary policy stance. Gross domestic product hasn\u2019t expanded at more than 2 percent annually since 2013.<\/p>\n
Reserve bank Governor Lesetja Kganyago, who has been a strong voice for the bank\u2019s independence, has in the past reiterated that any decisions taken by the monetary policy committee will be data-dependent and focus on the bank\u2019s primary mandate of targeting inflation at three to six percent.<\/p>\n
While the central bank increased its key interest rate for the first time in more than two years in November, all 16 economists in a Bloomberg survey expect the repurchase rate to remain unchanged at 6.75% on January 17.<\/p>\n
\u201cThe ANC is not proposing tweaking the mandate of the Reserve Bank,\u201d Enoch Godongwana, the ANC\u2019s head of economic transformation, said Saturday.<\/p>\n
\u201cThe independence of the Reserve Bank is sacrosanct. The intention is coordination between the monetary and fiscal authorities.\u201d<\/p>\n
The National Treasury, which slashed its growth forecast for 2018 by half to 0.7% in October, may take a prudent stance on tax hikes this year when is unveils its budget next month as the country prepares for elections expected to take place in May.<\/p>\n