South African central bank stresses importance of independence

PRETORIA: The South African central bank's independence is an important check on government-controlled fiscal policy, a central bank deputy governor said on Tuesday, following a high-profile row over the role of the bank.

Some senior officials in the governing African National Congress (ANC) party have this year called for the South African Reserve Bank (SARB) to explicitly target economic growth and job creation.

But other ANC officials aligned with President Cyril Ramaphosa rejected the call to change the bank's mandate and reassured investors that the independence of the SARB was not under threat.

"In the South African context we do feel an independent bank is an important check in the equation. ... Our system has given government the fiscal policy levers," SARB Deputy Governor Kuben Naidoo said in a public lecture.

Naidoo said monetary policy needed to assess whether the economy was "too cold or too hot" and whether fiscal policy was acting normally.

He added that higher levels of debt and higher deficits had introduced risks into the economy, like a higher price of capital, which had to be taken into account.

"Monetary policy has to take a broader view than just inflation. It's an obvious point but it often goes unsaid in macroeconomic discussion," he said.