Reserve Bank governor Gill Marcus has welcomed instructions from Finance Minister Pravin Gordhan to consider growth and employment in setting interest rates.
Gordhan spelt out the nuance he would be looking for in a two-page letter to Marcus this week.
"It's a fine balance that needs to be there and I think this mandate letter sets it out very clearly and it's most welcome," Marcus said.
Zwelinzima Vavi, general secretary of the Cosatu labour federation, told Business Times: "We are extremely disappointed in the statement on inflation targeting."
In his Budget address, Gordhan dismissed calls for a revision of the Bank's constitutional mandate and of inflation targeting, but conceded: "The role of the Bank in maintaining financial stability will also be enhanced."
He said this would be mainly through more regular and thorough consultation between the Bank and the Treasury.
He also said he had written to Marcus reaffirming the inflation targeting policy and the current target of 3% to 6%.
The letter diluted the emphasis on inflation, which former governor Tito Mboweni had insisted until South Africa was clearly in recession was his only mandate.
Source: Times Live
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