For Creamer Media in Johannesburg, I am Lumkile Nkomfe.

Making headlines: Treasury warns against changing Reserve Bank ownership; 45 compliance notices issued for contraventions by consumer goods suppliers; And, South Africa inflation expectations drop to near four-year low

Treasury warns against changing Reserve Bank ownership

Changing the ownership structure of the South African Reserve Bank could generate fears among investors about expropriation and create more uncertainty about property rights, according to the National Treasury.

While full ownership of the central bank by the State may be desirable, “it will potentially have huge cost implications and require significant trade-offs, including a negative impact on investment and on economic growth,” the Treasury’s deputy director-general for tax and the financial sector, Chris Axelson, told lawmakers in Cape Town today.

Parliament’s standing committee on finance is holding hearings on the South African Reserve Bank Bill, which proposes amending legislation to make the State the sole shareholder of the central bank and give minister of finance the power to appoint directors to its board.

South Africa’s central bank is one a handful globally with private shareholders. While the African National Congress ratified a proposal in 2017 for the State to own the central bank, the bill to effect that change was tabled by Julius Malema, leader of the opposition Economic Freedom Fighters, in 2018. It lapsed twice and was revived by the finance committee last year, but is unlikely to secure sufficient votes to pass, with the ANC having shifted its stance.

45 compliance notices issued for contraventions by consumer goods suppliers

The National Consumer Commission has issued compliance notices to 45 noncompliant suppliers of goods across South Africa after uncovering numerous contraventions of the Consumer Protection Act.

NCC acting Commissioner Hardin Ratshisusu said food safety remains its top priority. Ratshisusu explained that this enforcement is part of targeted action to stem the sale of unsafe products to consumers.

The NCC will continue to collaborate with other regulators to ensure compliance with the CPA and related legislation.

During a series of nationwide compliance and monitoring inspections, the NCC discovered that some suppliers were selling expired and spoiled food items, including dairy products, meat products, maize meal, eggs, snacks, biscuits and noodles.

In some cases, items had no expiry or best-before dates.

This contravenes the CPA, which guarantees consumers the right to safe, usable and good-quality goods. Date markings assist consumers in determining the shelf life and safety of the products before making any purchase, the NCC says.

And, South Africa inflation expectations drop to near four-year low

South African inflation expectations fell to an almost four-year low, providing policymakers with another reason to press ahead with their easing cycle.

Average inflation expectations two years ahead — which the central bank’s monetary policy committee uses to inform its decision-making — slipped to 4.5% in the second quarter from 4.7% previously, according to a survey released on Wednesday by the Stellenbosch-based Bureau for Economic Research.

The MPC prefers to anchor inflation expectations at the 4.5% midpoint of its target band, and is in talks with the National Treasury to adjust the goal to 3%.

The data combined with low inflation bolsters the case for the panel to again cut the key interest rate by 25 basis points to 7% when it delivers its next decision.

Forward-rate agreements, used to speculate on borrowing costs, are pricing in 18 basis points of cuts at the July 31 meeting, or a 72% chance of a 25-basis-point reduction. The contracts are pricing in a further 14 basis points of cuts in the remainder of the year, implying a 56% chance of a second 25-point reduction.

Governor Lesetja Kganyago said South Africa’s inflation rate that’s been hovering near or below the floor of the MPC’s 3%-to-6% target range for eight consecutive months is creating “opportunistic disinflation” that will help policymakers to anchor price expectations at a lower level.

That’s a roundup of news making headlines today

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