SA Reserve Bank shuns calls for broader mandate

and that it undertake quantitative easing to support an economy facing its deepest contraction in almost nine decades.

“Given all the challenges facing South Africa, we should recognize that monetary policy is the last place where we should consider risky changes,” he said. “We have a well-established inflation-targeting framework, which is delivering low interest rates and low inflation. This is the most functional part of the macroeconomic framework.”

“Formally adding an extra mandate, in the context of our propensity to stagflation, could encourage policy mistakes and weaken credibility,” Kganyago said.Muted price growth has allowed the central bank to lower the benchmark interest rate by 300 basis points this year to help prop up the economy. While inflation was below 3% in May and June, the central bank doesn’t see a risk of a negative rate, or deflation, which means quantitative easing is also not an option.

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