PAUL RICHARDSON, Johannesburg | Sunday 6.30pm
NEW Reserve Bank Governor Tito Mboweni on Friday night said that the focus of monetary policy under his rule will be on the inflation rate and not on the exchange rate.
Speaking at a ”meet the press” gathering in a Johannesburg restaurant on Friday night, Mboweni said he does not favour currency targeting, a monetary policy tool he said has been ”discredited”.
This comment is in line with the approach by Stals, who announced last year that the central bank will adopt an ”asymmetrical” exchange rate policy — buying and selling foreign exchange at any time rather than intervening during periods of rand weakness.
Mboweni said inflation will be his main priority and alluded to the possible introduction of inflation-targeting. He said the issue of inflation targeting will be addressed at the Bank’s annual meeting on August 24.
He said there are benefits to be garnered from currency-boards, exchange rate regimes linked to hard currency reserves, but suggested this is a less favoured option.
Stals has backed the idea of setting inflation targets.
Mboweni also intends to transform the mainly white-staffed bank to make it more representative of South African society.
”By 2005, we will have 50% white and 50% black and 33% women,” he said.
Mboweni has spent the last 12 months being steeped in everything there is to know about central banking and takes over as Governor on August 7.
He has visited central banks in the US, Europe and South America and become familiar with the 14 departments of South Africa’s central bank. He has also brought himself up to speed on the current thinking about monetary policy. Mboweni was reluctant to divulge anything specific about what approach he will take towards monetary policy. — Reuters