South Africa\u2019s finance minister rebuffed a call by some in the nation\u2019s governing party for him to push the central bank to use measures other than lifting borrowing costs to curb inflation, as he reaffirmed the bank\u2019s independence.<\/p>\n\n\n\n
The African National Congress on Sunday asked Enoch Godongwana to hold urgent talks with the South African Reserve Bank about ways to address the surging cost of living \u201cother than raising interest rates.\u201d<\/p>\n\n\n\n
The comments come as the ANC gears up campaigning for presidential elections next year, when the party risks losing political support because of weak economic growth, high unemployment and growing inequality.<\/p>\n\n\n\n
\u201cI\u2019m not in discussion with the central bank on that matter,\u201d Godongwana said Tuesday in an interview with Bloomberg Television at a meeting of Group of 20 finance chiefs in Gandhinagar, India. \u201cThe 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.\u201d<\/p>\n\n\n\n
The SARB\u2019s monetary policy committee has raised its benchmark rate by 475 basis points since November 2021 in a bid to rein in inflation that has been above the 4.5% midpoint of its target range, where it prefers to anchor price-growth expectations, for more than two years.<\/p>\n\n\n\n
The central bank is scheduled to announce its next rate decision on Thursday, the day after latest inflation data is released. Economists surveyed by Bloomberg forecast annual price growth slowed to 5.5% in June, compared with 6.3% in May. They expect the SARB to raise rates by 25 basis points to 8.5%.<\/p>\n\n\n\n
Godongwana regularly meets with central bank Governor Lesetja Kganyago to make proposals on the direction of policy. While the ANC has previously called for the central bank\u2019s mandate to be broadened to shore up the economy, it has said it\u2019s committed to preserving the bank\u2019s independence.<\/p>\n\n\n\n
Rate Decision<\/strong><\/p>\n\n\n\n The bank is \u201crequired to be in consultation with the minister responsible for finances\u201d under the constitution, \u201cbut that doesn\u2019t mean the minister responsible for finances can tell them what to do,\u201d Godongwana said.<\/p>\n\n\n\n Kganyago said earlier this month that while tight monetary policy is painful, high inflation does even more harm to those who can least afford it.<\/p>\n\n\n\n \u201cInflation is ravaging the poor,\u201d he said in a July 5 interview with Johannesburg-based broadcaster Metro FM. \u201cThe rich have got property. They\u2019ve got shares, and those cushion them against rising inflation.\u201d<\/p>\n\n\n\n Those craving relief from elevated borrowing costs should understand that the way to get them is price stability.<\/p>\n\n\n\n \u201cInflation has got to fall because we know historically that when inflation is low in South Africa, South Africa experiences lower interest rates,\u201d Kganyago said. \u201cThat is where we should be going.\u201d<\/p>\n\n\n\n Godongwana also said the Treasury expects to reduce its economic growth forecast because of frequent power outages in South Africa. The revised estimate will be announced when the finance ministry unveils its medium-term budget statement in October, he said, declining to provide specific numbers. The Treasury forecast in February that the economy will grow 0.9% this year, compared with 2.5% last year.<\/p>\n\n\n\n The fluctuation in electricity output make it hard to make a reliable estimate at this stage, Godongwana said.<\/p>\n\n\n\n
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