“Hands off the Reserve Bank” – says Ramaphosa ahead of the repo rate announcement.
Economists and many South Africans with a vested interest in the ongoings of the country’s economy were left scratching their heads when President Cyril Ramaphosa made subliminal calls to the South African Reserve Bank (SARB) to be more considerate when approaching the repo rate announcement, during his speech at the ANC’s manifesto launch.
What is the repo rate?
According to The Economic Times, the repo rate is defined as“the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.”
Ramaphosa clears the air around SARB independence
Was he compelling the reserve bank to compromise the health of the country’s economy to bolster employment? According to Business Day, his response to this, in his address to business leaders on Wednesday, was an indication of the arbitrary relationship between the central bank and the ANC.
Caught in between are the interests of the people. While the central bank’s mandate is to ensure that it manages the flow of money in the economy, within the 3-6% inflation rate, Ramaphosa’s duty is to protect an already weak economy — but he and the ruling party’ cant be seen as meddling with it or its policies
“The independence, standing and the role of the Reserve Bank is sacrosanct and will remain independent,” he stated on Wednesday.
SARB governor to deliver latest repo rate figures
The governor of the reserve bank, Lesetja Kganyago, is expected to deliver the latest repo rate for the first quarter of the year. While many economists are of the firm belief that it stands to remain unchanged at 6,75%, the mood will surely be shifted towards its independence and clear influence from the ANC.
Finance Minister, however, reiterated the words of his senior, and assured the private sector that the ANC’s interests are aligned with the view of an independent central bank that is free from external influences.
“A look at economies across the world will show that the macroeconomic outcomes are much better in countries with independent central banks,” Mboweni stated.
Ramaphosa is expected to make the trip to Davos, Switzerland, to strengthen lost ties with foreign nations at the upcoming World Economic Forum (WEF).
South African President Cyril Ramaphosa. Picture: GCIS