Tito Mboweni after a long and illustrious career as The Guv of the Reserve Bank is to retire. His tenure was dominated by the policy of inflation targeting. Tito is moving on to be replaced by Gill Marcus. This may or may not herald a policy change, but The Guv is giving it his best in his last few moments at the helm. He recently addressed University of Johannesburg students and these are some of the points that he made:
- Bank should remain independent
- Scathing of government management
- Bank should protect the currency
These are pretty normal ideas in the particular economic framework that most of the world exists in. The fact that the Bank is private however does allow control of the money in the country to be outside of government control. Money control can often have a larger effect than who is actually in government. The government set the policy of inflation targeting for which Mboweni came in for a lot of flak.
While the policy of inflation targeting can be seen to have been successful it still has many detractors and it will be interesting to see if the Reserve bank takes a new stance under the new Guv. The South African economy has so far weathered the global crisis better than many others and we are expecting a boost with the World Cup next year. Regardless of any new policy now is always a good time to plan your budget and make sure that you are not surprised by any shocks that may come in the future.