JOHANNESBURG – The ANC’s call for the SA Reserve Bank (Sarb) to alter its mandate to make provision for employment and economic growth received a muted reaction from the markets.
The JSE closed yesterday’s session flat, with the all share index down just 0.31 percent, while the benchmark top 40 index was 0.33 percent weaker.
The rand was bid at R13.83 against the dollar by 5pm, showing no signs of weakness following the ANC election manifesto over the weekend that created uncertainty about the independence of the Sarb.
The ANC on Saturday followed-up on the resolutions of its 54th National Conference that took place in December when it said: “The ANC believes that the Sarb must pursue a flexible monetary policy regime, aligned with the objectives of the second phase of transition. Without sacrificing price stability, monetary policy must take into account other objectives such as employment creation and economic growth.”
North-West University Business School economist Professor Raymond Parsons said the ANC decision should be carefully handled to avoid sending the wrong message to the markets.
“To retain the confidence of the markets and investors the Sarb’s monetary policy decisions must thus continue to be data-dependent and should still focus mainly on the bank’s primary mandate of targeting inflation between 3 and 6 percent,” Parsons said.