Marcus feels the heat

Reserve Bank governor Gill Marcus, who surprised analysts with a 50 basis point interest rate cut last week, admits she is feeling the heat

"The heat is always there, it's the nature of the job," she said.

Since replacing Tito Mboweni as governor there has been pressure on her by the left to lower the rate. They applauded Marcus's appointment and made it clear they expected the former communist and stalwart of the liberation struggle, to toe the line.

Inevitably, questions are being asked about whether she succumbed to this pressure.

"No," she says firmly. "If the data had not enabled us to do it we would not have done it. There was certainly no pressure in the sense of, 'this is what is expected of you to do and therefore you must do it'."

But a lot of analysts looked at the same data and decided Marcus would not cut rates. She points out that their views were "very mixed".

Much was made of a note which finance minister Pravin Gordhan sent her, emphasising that the promotion of growth and employment was very much part of her mandate as well as keeping inflation in check.

Her mandate is "very clear", she says. It is "to take growth and employment into account, but in taking them into account you've also got to not lose sight of what your primary responsibility is".

Cosatu complained that the Bank's cut was too little too late.

"I haven't been here long enough to answer that, but it isn't only a Cosatu view."

There may have been no overt government pressure on her but Marcus would have been acutely alive to Cosatu's outrage if she hadn't cut the rate.

To suggest there was, and will be, no pressure is "a bit idealistic", she concedes. But "perhaps there should be a recognition that pressure is something I'm used to. I've been used to it all my life. So I'm not going to buckle. Our core function remains to tackle inflation."

Whatever she does will be informed by the figures and nothing else. Marcus is keen to make the point that the pressure is not only from Cosatu.

"One shouldn't focus exclusively on the unions. Obviously they're a big voice but the crucial thing is to try to ensure a much greater understanding in society as a whole of what it is the Reserve Bank can do, what it should do, and what it also should not do."

She hopes this will "create a better environment in which the Reserve Bank can operate".

Was this neglected in the past? "I'm not in a position of knowledge about what occurred before. But what we are seeing is the extent to which this really does create better understanding. It's not that everyone will agree with you, they certainly won't."

What matters is that the Reserve Bank "establishes a relationship" with different sectors such as mining and manufacturing and that through its research teams "we go out and see what's happening in the real world".

This spirit of glasnost is one of the most noticeable changes Marcus has brought to the Bank. She says she has had "one very good meeting" with Cosatu, and with other unions and black business. And more will follow.

Marcus may be governor but she is still a "comrade" at heart and wants to dispel the "aura of mystique" that surrounds the bank and discourage the notion that it is "different and apart" from the rest of society.

"I don't see the Bank as an ivory tower. We are very relevant and important to the country."

The aim of engaging with its stakeholders is not necessarily to convert them to the Bank's way of thinking.

"It's not just for them to understand us but for us to understand how things are perceived from different angles and different areas in the economy."

Her message to the left is not to overestimate the Bank's capacity to improve life merely by lowering the interest rate.

"You've got to recognise that we have these very big structural problems. So although it's about what the Bank can do it's about what others need to do as well."

What others, and what do they need to do?

"I don't think it's for me to say. Industrial policy, economic strategic framework, the planning ministry - these are the areas that need to tackle that."

Should she perhaps voice this fact more loudly?

"I've no doubt government as a whole is very aware of the issues and challenges this country faces. They're very alive to the big structural problems."

Really? How about education, perhaps the biggest structural problem of the lot?

"Yes," says Marcus, "but you don't solve education overnight."

Surely, nobody expects government to solve education overnight; the concern is that after 15 years the situation has got so much worse.

"It's not just a governmental problem. As a society every one of us has a role to play," Marcus says.

But first and foremost it's a problem of leadership, isn't it? So it is a governmental problem.

"Yes, but your discussion with me isn't about government, is it?" she says sharply.

As governor, Marcus has to hide her feelings. She does, however, indicate her unhappiness with the Eskom tariff hike.

"You're using tariff hikes which have an inflationary impact when, in fact, it really is a tax and this needs to be managed by government in a slightly different way because it's taking resources out of people's pockets."

Should the Reserve Bank have more influence over such decisions?

No, that's political and the Bank doesn't do politics.

"What we have a role in is to provide information to those who take these decisions about the economic impact of those decisions."

Does the scale of the increase suggest she is being heard?

"That would be very hard to judge, but I certainly think 25% is better than 45%, which is where it started out at."

Thanks to the increases it won't be long before Marcus is forced to start hiking interest rates. How long?

"We're not there yet."

Is she hoping her engagement with the unions soften their outrage when the time comes?

"That would be a little bit idealistic." But if they do protest, she says, "they'll find the door open and they're welcome to come in and we can have a conversation together".

Source: Times LIVE