The mandate of the South African Reserve Bank reiterated

An extract from the remarks by Dr Monde Mnyande, Advisor to the Governor and Chief Economist of the South African Reserve BankBank, presented at the Leadership Forum of Airports Company South Africa on 12 March 2010

On 16 February 2010 government clarified and extended the mandate of the Bank. The Minister of Finance’s open letter (see our previous post) to the Governor of the Bank noted the constitutional objective of the Bank. The Bank’s primary objective is to protect the value of the currency in the interest of balanced and sustainable growth. It was also confirmed that the Bank should continue to pursue a target of 3 to 6 per cent for headline consumer price inflation, and should do so within a flexible inflation-targeting framework.

The letter reaffirmed the flexibility afforded the Bank in reacting to current and expected supply-side shocks. The flexible inflation-targeting framework involves a focus on a medium-term time horizon in getting back to the target if the economy experiences an inflation shock, thereby avoiding unnecessary instability in output and interest rates.


Policy responses should have due regard to the factors that might impact on the attainment of balanced and sustainable growth, such as the source of the inflation shock, magnitude of the gap between actual and potential economic growth, credit extension and asset bubbles, employment, and the stability and competitiveness of the exchange rate.

The events of the past three years have, once again, highlighted the importance of financial stability. The letter reaffirmed the role of the Bank in overseeing and maintaining financial stability and, in the aftermath of the global financial crisis, has now also made this financial stability role an explicit part of the Bank’s mandate.

See the full speech by Monde Mnyande