Former Treasury official Donaldson says Bank can buy up to R20bn of bonds a week
Current shocks to global and domestic demand mean inflation is not an immediate concern, says former Treasury official
The Reserve Bank should scale up its bond purchases to as much as R20bn a week to help reduce borrowing costs for the government as it seeks to fund emergency measures to deal with the Covid-19 crisis, according to one of the economists briefing advisers and officials in the presidency.
That would be a major escalation in the use of the Bank’s firepower after deputy governor Fundi Tshazibana (https://www.businesslive.co.za/bd/economy/2020-04-07-reserve-bank-bought-bonds-worth-r1bn-in-march/) told Business Day on April 7 that it had bought about R1bn of government-debt securities the month before, a relatively modest number in a market valued at about R2.5-trillion. The Bank announced its programme on March 25, after identifying market dislocations that pushed bond yields to record highs.