South African politicians want say on rate votes

Obed Bapela, a member of parliament for the African National Congress (ANC), told Business Report, a South African newspaper, said that it was important that Tito Mboweni, the governor of the central bank, heard the opinions of the electorate through their elected representatives and that Mboweni was required to report to them regularly.

Bapela said that he did not wish to limit the central bank's independence but said that it was important that its staff were informed about the damage that high interest rates were doing to the nation's poor.

"It's certainly a curious time to demand more oversight of the Reserve Bank when it looks like inflation is set to peak at about 10% in the coming months," Razia Kahn, the head of research for Africa at Standard Chartered, a bank, told Central Bank News.

The Reserve Bank hiked rates by 150 basis points last year to 11% in a bid to soothe inflation which at 8.8% in the year to January is now way above the 6% upper limit of the central bank's inflation target.

However, with the last official estimate putting unemployment 25.5%, left-wing members of the ANC and the trade unions have urged the Reserve Bank to lower rates to encourage the depreciation of the rand, aiding the country's exporters. The ascent of the left-leaning Jacob Zuma to the helm of the ANC has exacerbated fears among foreign investors that the central bank's independence is under threat, in spite of the party's assurances to the contrary.

"There won't be any formal proposals to limit the central bank's independence yet. But given fears that a more leftist ANC will eventually compromise the central bank's independence, this development won't be welcome news for investors," Khan said.