South African central bank boss to step down
The South African Reserve Bank's respected governor Gill Marcus on Thursday announced that she will not stay in the job after her term expires in November.
“I will not be available for renewal” said Marcus, after what she declared was her last meeting of the bank’s interest rate-setting panel kept rates on hold.
Marcus, 65, became the bank’s first female governor in late 2009, guiding Africa’s most developed economy out of a recession in the wake of the global economic meltdown.
Exiled during the dark days of apartheid, she returned to South Africa in the early 1990s and joined Nelson Mandela’s government as a junior minister.
Despite being a long-time member of the African National Congress, Marcus has been critical of President Jacob Zuma’s government.
Last year she said the government needed “to be decisive, act coherently, and exhibit strong and focused leadership from the top” — a remarkably political statement for a central banker.
Zuma on Thursday thanked Marcus for “her excellent service and leadership”.
She leaves the bank with the country again tilting toward recession, burdened with rolling strikes, moribund growth and painfully high unemployment.
The rand weakened sharply on news she would step down.
Razia Khan, an economist at Standard Chartered Bank said that was a “knee-jerk response” that reflected “the esteem in which Governor Marcus is held by the markets”.
Attention will now turn to who will replace her, with many predicting it will be someone from within the bank.
“Clearly there are very big shoes to fill,” said Peter Attard Montalto, emerging market economist at Nomura.
“She established very firmly the credibility of the SARB in this post-crisis age, she built up the institution internally a very great deal.
“If it was an external person, that would obviously be more of an unknown, more of a risk on that front,” he said.
Zuma’s government said that a replacement would be named “in due course.”
– No rate hike –
After her last policy meeting, Marcus announced that the bank had held off raising interest rates, citing risks to the economy.
Marcus said the panel “is still of the view that interest rates will have to normalise over time,” but added that it “has decided that the repurchase rate will remain unchanged at 5.75 percent per annum”.
“The combination of stubborn inflation and a sluggish growth outlook continues to pose a difficult dilemma for monetary policy,” she added.
The bank has said it aims to gradually raise rates, hoping to curb inflation that remains above the six percent upper edge of its target band.
The reserve bank has hiked the repo rate by 75 basis points since the beginning of the year.
But economic growth in South Africa has been significantly hampered by months-long strikes in the mining and manufacturing sectors and electricity constraints.
The bank predicts the economy will grow 1.5 percent this year, lowered from 1.7 percent. Growth expectations for both 2015 and 2016 was trimmed by 0.1 percentage points, to 2.8 percent and 3.1 percent respectively.
The inflation outlook is slightly better than the last meeting. Marcus said inflation is now expected to average 6.2 percent in 2014, down from the previous forecast of 6.3 percent.