Kganyago tells MPs that calls for SARB to broaden mandate misplaced

JOHANNESBURG - Reserve Bank Governor Lesetja Kganyago has again addressed calls for the central bank to broaden its mandate to include policies that could help bring down the country's stubbornly high unemployment.

Over the years, the central bank has faced mounting pressure from some political parties and trade unions to add unemployment to its existing mandate to protect the value of the rand by targeting inflation.

Kganyago delivered the South African Reserve Bank and Prudential Authority’s annual results to the National Assembly's Standing Committee on Finance on Thursday, where he told MPs the calls were misplaced.

Only one central bank has a dual mandate of employment targeting and price stability, which is the US Fed.

In the South African context, some economic experts don't believe that expanding the reserve bank’s mandate would resolve the policy and regulatory barriers that inhibit and discourage capital investment and job creation.

Kganyago has also previously warned that putting pressure on the central bank to bring down unemployment could lead to policy mistakes.

In his latest comments on the matter, Kganyago has maintained his stance.

"The rest of the central bank universe have got the responsibility of price stability and that other responsibility is placed elsewhere and isn’t it wonderful that our president decided to appoint a minister of labour and employment, and correctly so, because the choices that must be made are political ones."

Changing the reserve bank’s mandate would require constitutional amendments or changes.