Bank confirms Naidoo has left

• Make-up of MPC is not clear

With just two weeks to go to the first meeting in 2024 of the monetary policy committee (MPC), it is not clear exactly who will be there – but it is certain that deputy governor Kuben Naidoo will not.

The Reserve Bank confirmed on Tuesday that Naidoo had left the Bank on December 1 to start his “gardening leave”, the six months after governors leave the Bank during which they may not sign with new employers.

The presidency did not formally confirm that Naidoo had resigned or indicate when he might be replaced, saying only that “the process to manage the transition is under way and an announcement will be made on the conclusion of the process”.

Economists said it is an open secret that Naidoo, who was viewed by the market as being more of a dove on interest rates, has left. While the make-up of the MPC may not matter for the outcome of the January meeting, where little dissension over holding interest rates steady is expected, it will be more of an issue in March.

Naidoo is known to want to embark on a new career after 29 years in the public sector and approached President Cyril Ramaphosa in July 2023 to discuss an earlier end to his second, five-year term of office, which was due to run until March 2025. But Ramaphosa has yet to provide a formal answer or announce a new deputy governor to replace him, raising questions whether the MPC will be as small as four voting members or as large as six when its meeting starts on January 23.

A four-member committee would give the hawkish governor the casting vote in the event of a tie.

It is unclear whether David Fowkes, a senior official in the Bank’s financial markets department who has been appointed special adviser to the governors, will join the MPC.

Special advisers have been members of the MPC in the past. They include former head of monetary policy Brian Kahn as well as Naidoo and deputy governor Nomfundo (Fundi) Tshazibana, who joined the Bank in the special adviser role before they were appointed to their deputy governor posts.

However, Bank spokesperson Thoraya Pandy did not comment on whether Fowkes would join the MPC, confirming only that he had been appointed as an adviser to the governors on December 1 2023 following an extensive recruitment process.

The MPC has been just five strong in the recent past but historically has had as many as seven members. It includes the governor and the three deputies.

Pandy said: “The governor, in consultation with his deputies, can invite up to four staff members, based on their expertise, to serve on the MPC for a three-year term, which can be renewed.”

While few in the market expect much dissension at the MPC’s January meeting, which is expected to hold rates, the

question of who is on the committee will become more of an issue in March.

“There are not really a lot of question marks about how the January meeting will go, though there is a chance you get one vote for a cut. March becomes more interesting, especially if only four people will be voting,” Goldman Sachs economist Andrew Matheny said.

It is the president’s prerogative to appoint the Bank’s governors and deputy governors, which is why he also has to accept it formally if they resign. The Bank’s board is believed to have decided it would be unfair to force Naidoo to stay. A labour lawyer said the employer could not stop an employee from ceasing to work, taking notice periods into account.

Ramaphosa’s delayed decisions on Naidoo’s post have added to uncertainty over the Bank’s leadership, with the governor and all his deputies due to be replaced or reappointed during 2024 and concerns about the choices the president might make in a tough election year.

Governor Lesetja Kganyago’s second five-year term is due to end in November and those of deputies Tshazibana and Rashad Cassim in August. There is no limit on the number of terms they can serve.

The president must consult the Bank’s board and the finance minister on the appointments, but is not required to accept their recommendations.