UDM says Reserve Bank should be mandated to do more

The United Democratic Movement (UDM) has reacted to the decision taken by the South African Reserve Bank (SARB) to keep the repurchase rate at its current level of 8.25%.

The UDM believes that SARB should be mandated to do more to act in the interest of South African citizens and the country’s economy, suggesting that its mandate “must align better with the work and aims of government.”

“The SARB’s primary object to protect the value of the currency should not be its only focus. It must have a secondary mandate, which is that of socio-economic development.

“The policy is outdated and has become a blunt instrument that only considers inflation as a yardstick. It is the poor and the working class whose livelihoods and asset bases that are being destroyed by the implementation of this policy,” UDM said in a statement.

READ MORE: Central Bank’s monetary policy must be rejected – Shivambu.

Speaking on Thursday at the last Monetary Policy Committee (MPC) media briefing of the year, Reserve Bank Governor Lesetja Kganyago said the decision to keep interest rates unchanged was unanimous.

“Serious upside risks to the inflation outlook remain. In light of these risks, the Committee remains vigilant and stands ready to act should risks begin to materialise,” the Governor told media.

Market-based expectations for inflation in 2023 are currently 5.8%, while near-term break-even rates have dipped to 4.3%.

Kganyago said that at the current repurchase rate level, policy is restrictive, consistent with the inflation outlook and elevated inflation expectations, adding that SARB’s forecast for global growth in 2023 is broadly unchanged at 2.7% (from 2.6%), and 2.6% in 2024.

“Decisions will continue to be data dependent and sensitive to the balance of risks to the outlook. The inflation and repo rate projections from the updated Quarterly Projection Model (QPM) remain a broad policy guide, changing from meeting to meeting in response to new data and risks,” he explained.