Appointment of new Reserve Bank head welcomed

Lesetja Kganyago

"Kganyago was one of two deputy governors of the Reserve Bank, and as such his promotion to governor represents continuity," says Izak Odendaal, investment analyst at Old Mutual Wealth.

"Prior to joining the SARB in 2011, Kganyago was Director General at National Treasury, where one of his duties was interacting with local and international investors. He is thus well known to the market, and also highly regarded."

Odendaal notes that during Kganyago's tenure at the SARB, he served on the monetary policy committee (MPC), the body responsible for setting interest rates.

Rate increase

"We expect that the MPC under his leadership will continue to try strike a balance between the challenges of weak domestic growth, above-target but local stable inflation, and a tough external climate with US interest rates expected to start rising next year, potentially putting further downward pressure on the currency.

"This suggests higher interest rates ahead, but a far more gradual hiking cycle than in the past. In other words, it is a very difficult time to become head of the SARB, but Kganyago has the necessary experience, the respect of the market and also the support of a strong team at the SARB," Odendaal says.