On Monday Sfiso Buthelezi, Deputy Finance Minister Sfiso Buthelezi criticised the South African Reserve Bank for its policy of inflation targeting.
Kevin Lings, Chief Economist at Stanlib spoke to Redi Tlhabi, Afternoon Drive host, about the deputy ministers remarks.
Lings says the comment by Buthelezi has already created a lot of uncertainty.
He explains that generally the inflation targeting is decided by the minister of finance and not the Reserve Bank.
Having decided that there is going to be an inflation target they then instruct the Reserve Bank to the follow that policy.— Kevin Lings, Chief Economist at Stanlib
The actual target number in South Africa is three to six percent. That specific target range is determined by the minister of finance.— Kevin Lings, Chief Economist at Stanlib
He says the Reserve Bank, upon receiving directives from government, will then carry out that instruction and act independently of the government. Lings says the debate then ultimately takes place between the Central Bank, policy implementers and National Treasury.
The impact is compounded and unnecessary at this stage says Lings.