Mboweni 'to blame'

Nkululeko Ncana and Reuters

Nkululeko Ncana and Reuters

Cosatu secretary general Zwelinzima Vavi yesterday blamed Reserve Bank governor Tito Mboweni and his "conservative" Monetary Policy Committee for the decline in the country's economic growth, and called for the "review" of the institution's mandate.

Vavi said yesterday workers were bearing the brunt of Mboweni's "short-sightedness" in keeping high interest rates when the rest of the world was "aggressively" cutting rates in response to the global economic crisis.

"They dismissed our concerns and our calls for aggressive cutting of interest rates ... (and) have warned repeatedly that pursuing the goal of inflation targeting was not only misguided in the context of South Africa, but would hurt our economy badly," said Vavi.

He added that the country would not be "directly" affected had the "appropriate" macro-economic and industrial policies been implemented.

Mboweni kept the market guessing yesterday about a possible urgent interest rate meeting after data this week showed a contracting economy and slowing inflation.

An emergency meeting of the Monetary Policy Committee was widely expected by economists after Statistics South Africa said on Tuesday the economy contracted by a sharper than expected 1,8percent in the fourth quarter of 2008, raising concern it was headed for recession.

Yesterday Statistics South Africa said producer price inflation cooled to 9,2percent year on year in January from 11percent in December, a day after data showed the CPI inflation rate targeted for monetary policy slowed to 8,1percent, albeit less than the expected 7.5percent.