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JOHANNESBURG, June 30 (Reuters) - Economists polled by Reuters say South Africa's Reserve Bank should continue targeting inflation to protect living standards and not shift to prioritise growth as has been suggested in a burgeoning row over bank independence.
Busisiwe Mkhwebane, South Africa's official watchdog over public graft, triggered the spat last week by calling for the central bank to be more concerned about citizens and less on the rand.
A poll taken this week showed all but two of the 21 economists surveyed said the Bank should continue with its current mandate of targeting price stability rather than including or prioritising growth.
Economists said changes to the mandate to include or focus on growth would lead to a depreciation of the rand, deeper debt downgrades and uncertainty in financial markets.
Mkhwebane had suggested the primary object of the South African Reserve Bank should be to promote balanced and sustainable economic growth, whilst ensuring the socio-economic well-being of the citizens is protected.
However, Frank Blackmore, an independent economist in Johannesburg, argues that if growth is targeted instead of inflation, there is a danger neither will be achieved.
"Firstly, growth is not driven through monetary policy but rather through fiscal policy as well as general business and trade legislation," Blackmore said.
The bank on Tuesday filed a High Court challenge against a recommendation by Mkhwebane to change its mandate, saying it would undermine its role in keeping the financial system stable.
The poll further found that South Africa, which has hiked interest rates by 200 basis points in the past three years, has not been overly hawkish since the 2008 global slowdown.
Economists expect rates to be cut 25 basis points to 6.75 percent as inflation is expected to slow to 5.4 percent next year.
Still, in South Africa - which aims to keep inflation between 3 and 6 percent - living standards are far better than high growth continental peers like Angola where even the cost of ice cream is astronomical and Ghana where interest rates are 22.5 percent.
Elna Moolman, economist at Macquarie Securities, said the bank has always been applying inflation targeting very flexibly, precisely because it gives due consideration to economic growth.
It also pays attention to core inflation, a gauge for longer term trends that excludes items - food, fuel and electricity - that stokes prices due to events out of consumers hands, like natural disasters and geopolitical tensions.
Mandla Maleka, economist at Eskom Treasury added that assigning economic growth responsibility to the Reserve Bank would create the unwanted risk of multiple institutions tasked to drive economic growth policy.
"However, if the SARB is mandated to anchor inflation through inflation targeting, then the policy is clear that it supports growth and other imperatives." (Editing by Jonathan Cable/Jeremy Gaunt)