MONDAY, 3.30PM:
GOVERNMENT is planning to set specific inflation targets to guide the South African Reserve Bank toward a more clearly defined goal, despite the opinion of Reserve Bank governor Chris Stals that South Africa is not ready for such a move.
Stals said he supports the idea of inflation targets set by the government, but does not believe they can be introduced within two years, as they will need to be incorporated into the growth, employment and redistribution (Gear) strategy.
Despite this cautionary, Finance Director-General Maria Ramos said government setting the inflation targets is in line with international practice, providing greater transparency as the targets will set a benchmark against which Parliament can evaluate the Bank’s performance.
Ramos said government setting inflation targets will not infringe on the independence of the Reserve Bank, as it will continue to control the instruments required to achieve monetary goals independent of the government.
Parliament’s finance committee is expected to propose this month that a monetary policy board be set up within the bank to help achieve these targets.