Gill Marcus, chairwoman of Barclays Plc’s Absa Group Ltd., was named as governor of the South African Reserve Bank to succeedTito Mboweni, who has been criticized by labor unions for not cutting interest rates faster.
Marcus, a former deputy central bank governor, will take over the post on November 9 after Mboweni indicated a desire to leave the position, PresidentJacob Zuma told reporters in Pretoria today.
Mboweni, 50, who was appointed as governor in August 1999, has been criticized by unions and businesses over his approach to interest rates and for failing to weaken the rand as the economy entered its first recession in 17 years. The Congress of South African Trade Unions, the labor union federation that backed Zuma’s bid to become president of the ruling African National Congress, has said Mboweni should be replaced.
“I wouldn’t read into the appointment that there will be a policy change,”Andre Roux, head of fixed income at Investec Asset Management, said after her appointment was reported in Mail & Guardian newspaper. “I think Gill Marcus will do a fine job.”
Marcus, 59, left the central bank in 2004, and was appointed chairwoman of Absa, South Africa’s largest retail bank, in March 2007. She is a senior member of the ANC and sat on the National Executive Committee, the party’s top decision-making body, between 1991 and 1999, before moving to the Reserve Bank.
Inflation Targeting
Under Mboweni, the central bank adopted a target range for inflation of 3 percent to 6 percent. He raised the benchmark interest rate 10 times to 12 percent between June 2006 and June 2008, as surging food and oil prices kept inflation above the target. Since then, the bank has cut the rate five times to 7.5 percent as economic growth plunged and inflation eased.
Mboweni left rates unchanged on June 25 when 21 out of 24 economistssurveyed by Bloomberg predicted he would lower it by half a percentage point. The governor cited rising energy costs as the main risk to inflation, which slowed to 8 percent in May.
Cosatu said the decision to leave the rate unchanged reflected the “gross incompetence” of the Monetary Policy Committee, which sets interest rates. The union federation has demanded that the central bank’s inflation-targeting policy be revised and members of an affiliate have demonstrated outside the central bank.
Unemployment
Economists and labor unions expected the Reserve Bank to continue cutting interest rates as Africa’s biggest economy shrank an annualized 6.4 percent in the first quarter, the most in almost 25 years. The country shed 179,000 non-farm jobs in the same period, pushing the unemployment rate to 23.5 percent, the highest of 62 countries tracked by Bloomberg.
Mboweni has also been criticized for not doing more to weaken the rand, which has surged 18 percent against the dollar this year, the second-best performer of 16 major currencies tracked by Bloomberg after Brazil’s Real. A stronger rand crimps profits for the country’s export industries including gold and platinum mining.
