LESETJA KGANYAGO: Reserve Bank’s aggressive response has helped allay economic crisis
The Bank has implemented important measures, including lowering rates and making liquidity available to banks
It is now clear that the Covid-19 outbreak will produce the worst economic downturn in a century, with output expected to contract by about 7% in 2020. The SA Reserve Bank has responded flexibly, quickly and aggressively to this crisis. Our five most important measures have been as follows:
We have lowered interest rates substantially. From our January cut the cumulative reduction in the repo rate for 2020 now stands at 275 basis points. To compare, the emerging market median is 100 basis points. The repo rate is now at its lowest level on record, and below zero in real terms.We have made liquidity available to banks through a range of facilities in addition to our usual weekly repo auctions, with take-up peaking at R83bn in March.We have provided regulatory relief to the financial sector to help maintain the flow of credit in the economy despite the temporary payment problems for firms and households caused by the Covid-19 shock.We have offered funding for small and medium e...
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