Kuben Naidoo resigns as SA Reserve Bank deputy governor against backdrop of vexed monetary policy

Deputy SA Reserve Bank Governor Kuben Naidoo, regarded by some analysts as a “dove” in the bank’s Monetary Policy Committee (MPC), has tendered his resignation. The date of his departure is not clear, but it comes at a poignant moment for domestic monetary policy as inflation pressures remain in the pipeline of a fragile economy that is barely growing.  

Naidoo’s resignation comes 18 months before his term was to end, but he is reportedly in talks with the Presidency and the South African Reserve Bank about the date of his departure. So he may still be on hand for the next scheduled interest rate announcement on 23 November.

Bloomberg and other news organisations reported his resignation, but by Monday afternoon the central bank had yet to issue a statement and did not immediately respond to Daily Maverick’s queries.

The news did not set off any immediate alarm bells in the markets. The rand was firmer on the day against the US dollar in late afternoon trade on Monday, fetching around 18.92/dlr from 19.14/dlr earlier in the day.  

The MPC can have up to seven members, but currently has five, and the President will appoint Naidoo’s successor. That means the appointee will have to have the blessing of the ANC, and, according to one analyst who spoke to Daily Maverick on condition of anonymity, there is no real succession plan in the works.

“There is no one lined up. It’s a bit of a mess,” the analyst said.

Naidoo is regarded as a “dove” by some analysts on an MPC that has taken a hawkish stance on inflation and protecting the value of the vulnerable rand, so it will be of more than passing interest to see who replaces him.

The SA Reserve Bank hiked its key repo rate by 475 basis points between November 2021 and May this year, bringing it to 8.25% and the prime rate to 11.75%. It held the rate steady at subsequent MPC meetings in July and September.

But Reserve Bank Governor Lesetja Kganyago warned at both those meetings that the spectre of inflation was still haunting the South African economy even though demand pressures are constrained as it is barely growing.  

“We stand ready to act,” he pointedly said at the conclusion of the September MPC.

Read more in Daily Maverick: Reserve Bank Governor says inflation not yet beaten – repo rate stays at 8.25%

The consumer price index (CPI) accelerated for a second straight month in September to 5.4% from 4.8% in August, driven by fuel prices which are bringing consumer inflation back to the upper band of the Reserve Bank’s 3% to 6% target range. The rand remains weak, while the El Niño weather pattern may bode ill for summer grain crops including the staple maize.

So interest rates are not coming back down anytime soon, with or without Naidoo in the MPC mix.

Naidoo was appointed deputy central bank governor in 2015 and is described on the bank’s website as “an activist and a public servant committed to achieving a socially just society”.

He was acting head of the Secretariat for the National Planning Commission between 2010 and 2013 and also worked in the Treasury. DM