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08 Aug 2009 20:57
Many have tried to undermine the SA Reserve Bank (SARB)‘s independence, outgoing-governor of the bank Tito Mboweni said on Saturday evening.
He was addressing his farewell dinner held at the SARB’s headquarters in Pretoria.
Mboweni added that a central bank should be able to perform its function without “fear, favour or prejudice”.
Mboweni recalled how former president Thabo Mbeki asked how he should relate to him as governor.
Mboweni said he told the president: “Don’t phone me a week before a monetary policy committee meeting or a week after.”
The governor said he explained to Mbeki that his call could be misunderstood as trying to influence the SARB.
“He never phoned. I phoned him,” the governor said.
Mboweni added that there was no such thing as a popular central bank governor.
He said his predecessor Chris Stals had told him: “Once a central bank governor becomes popular, he must retire immediately. If you’re doing your job you have to be unpopular.”
Mboweni added that his time as SARB governor had allowed him to meet great central bankers such as the US Federal Reserve’s Alan Greenspan.
“He said to me that I ought to try to look a little bit older and wiser,” Mboweni joked. He added that he had also had to represent SA at World Bank, G20 and International Monetary Fund (IMF) meetings.
“One institution I never enjoyed was the IMF,” he said.
However, Mboweni added that he had enjoyed meetings at the Bank for International Settlements.
“It was an exclusive club of central bankers,” he said.
Mboweni noted that his time at the SARB had shown him the importance of price stability.
“Price stability is very important for ordinary people, but I haven’t yet seen a ‘Viva inflation-targeting T-shirt,” he quipped.
Two recent studies by the SARB had concluded that inflation undermined economic growth, the governor explained.
“Price stability is for the benefit of the poor, the entrepreneur and those who seek credit.”
The dinner was attended by, among others, Minister in the Presidency Planning Commission Trevor Manuel and the Minister of Finance Pravin Gordhan as well as governors and representatives of central banks in the Southern African Development Community.
The CEOs of the country’s major banks also turned out to bid farewell to Mboweni: Tom Boardman of Nedbank, Maria Ramos of Absa, Jacko Maree of Standard Bank and Sizwe Nxasana of FNB.
Mboweni took up his position as governor of the SARB 10 years ago.
Last month, however, President Jacob Zuma announced that former chairperson of Absa Gill Marcus would take over from Mboweni in November—after Mboweni had decided to step down.
There has been wide-spread speculation that Zuma’s decision was prompted by calls from the country’s trade unions for Mboweni to be replaced.
Unions have also asked the Zuma government to scrap the policy of inflation targeting and to continue to cut interest rates. - Sapa
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