ISAAH MHLANGA: Reserve Bank should help soften coronavirus blow to economy
Cut interest rates as much as 50 basis points in one go and help corporates experiencing credit and funding stress
Global markets are in turmoil and central banks are responding with emergency interest-rate cuts, while those countries with fiscal space are putting together stimulus packages primarily geared to health-care spending to help fight the Covid-19 pandemic.
The US Federal Reserve cut rates by 50 basis points, followed by the Bank of Canada and Bank of England with rate cuts of similar magnitude. Other central banks, including the People’s Bank of China and other emerging markets, have done so already. Conditions dictate that the SA Reserve Bank support the economy and cut rates as much as 50 basis points in one go, and even consider deploying macro prudential tools to help those corporates that are experiencing credit and funding stress.