Marcus to step down as Reserve Bank Governor
Reserve Bank Governor Gil Marcus (65) said she informed President Jacob Zuma that she won’t resume her post when her contract expires on November 8. The surprise announcement, which was made in response to a question at a scheduled press conference after she said the benchmark interest rate will remain unchanged at 5.75 percent, caused the rand to temporarily weaken against the dollar.
Zuma hasn’t decided on her replacement yet, his spokesperson Mac Maharaj said by phone.
“I have advised the president some time ago that I will not be available,” she told reporters in Pretoria. “I think the bank has an outstanding team of leadership, both in the executive monetary policy leadership of management of the bank.”
Marcus, a former deputy finance minister and chairperson of Barclays Plc’s South African unit, took office in 2009 after the global financial crisis hit, which had dragged the local economy into its first recession in 17 years and pushed up inflation.
Her move opens the way for one of her experienced deputies, Daniel Mminele or Lesetja Kganyago, to take up the top post at the bank, according to economists, including Goolam Ballim at Standard Bank Group Ltd., Africa’s biggest lender. “Its sad to see her leave but there is depth of talent in the Monetary Policy Committee [MPC] and the likes of Mminele or Kganyago may succeed her,” he said by phone from Johannesburg.
Stability has been a hallmark of Marcus’s tenure. During the time that she’s led the MPC, the benchmark rate has been adjusted just six times compared with 17 in the previous five years.
The next governor will be tasked with curbing an inflation rate that’s exceeded the 3% to 6% target for the past five months, while supporting an economy set to expand at its slowest pace since a 2009 recession. Inflation probably peaked at average 6.5% in the second quarter will average 6.2% this year, down from a previous forecast of 6.3%, Marcus said in the MPC statement today.
“She has been a very good governor,” Rian le Roux, chief economist of Old Mutual Investment Group, which has about $53-billion under management, said by phone from Cape Town. “Her communication skills have been particularly good. You probably can’t fault what the bank has done over time.”
Le Roux added that he expects her successor to be either Mminele or Kganyago, if Zuma decides to appoint someone from within the bank.
Policy makers paused after raising borrowing costs by 75 basis points this year to help bolster an economy battered by strikes and to support investor confidence as the country faces the threat of credit-rating downgrades.
The MPC today cut its growth forecast for this year to 1.5% from 1.7%. The rand’s slide below 11 to the dollar last week, the weakest level in seven months, is complicating the job of policy makers as pressure on inflation increases. The currency fell to as low as 11.1013 against the dollar after Marcus said she will step down and was trading at 11.0386 as of 4.54pm in Johannesburg.
“The markets didn’t react very favorably on the announcement of that, but I think if it is announced that it’s Lesetja Kganyago [that replaces Marcus], I think the markets will take to it quite favorably,” Gina Schoeman, an economist at Citigroup Inc. in Johannesburg, said by phone. “Not only is he very well-respected and he did a very good job while he was at National Treasury, but also many people have met him, many people know him and he’s seen as prudently hawkish.”
Kganyago (48) joined the central bank in May 2011 from the National Treasury where he had been director-general for more than seven years. Mminele (49) has been with the Reserve Bank since 1999 and was appointed for a second five-year term as deputy governor in July. – Bloomberg