Mboweni to meet unions on inflation

South African Reserve Bank Governor Tito Mboweni will meet trade union leaders on Monday to discuss their opposition to inflation targeting, a newspaper reported on Saturday.

The Weekender newspaper said Mboweni would meet leaders of the National Union of Metalworkers (Numsa) to discuss proposed alternatives to the bank’s policy of trying to keep inflation within a target range.

South Africa’s government is under pressure from trade union allies to scrap inflation targets that they say have led to overly tight monetary policy, hurting the poor.

Unions have threatened strikes if interest rates are not cut more and have pushed for Mboweni to go after his term ends in August, raising concern among some investors worried about a shift to more leftist economic policy.

No one at either the Reserve Bank or Numsa could immediately be reached for comment.

The Reserve Bank targets consumer inflation at between 3% and 6% and raised its key repo lending rate by five percentage points in the two years until June 2008 to try tame inflation that peaked at 13,6% last year.

It has cut the repo by 450 basis points to 7,5% since December, though, to try boost flagging economic growth despite inflation remaining outside the band. Headline CPI stood at 8,4% in April.