LONDON – The ANC NEC Lekgotla on Tuesday surprised with specific references to changing the SA Reserve Bank’s Monetary Policy Committee (MPC) mandate, to implementing the Nasrec resolutions – exploring nationalisation – and even adding in that consideration should be given to quantitative easing (QE) to fund the developmental state.
All of these factors will be blocked by the current Reserve Bank and National Treasury leadership as well as viewed sceptically by the President in our view.
However, we think this is a key “fallout risk” issue. Ie whilst nothing may happen in the short to medium run in terms of actual change, severe damage can be done as these issues are pushed forwards.
We would caution investors here that this is a structural institutional issues and not about the July MPC meeting which is a separate short run matter. We read a few key issues in this announcement being made by the NEC: