‘SA financial system faces a combined supply, demand shock’

South African Reserve Bank Governor Lesetja Kganyago says the country’s financial system is facing a combined supply and demand shock in the wake of COVID-19.

He was speaking at a discussion forum on the socio-economic impact of COVID-19 on South Africa.

The bank says they were able to fight further challenges facing the economy because they used a range of tools to cushion the impact of COVID-19.

He says they were able to reduce interest rates by 275 basis points due to inflation being contained.

In the video below from last week, SARB governor Lesetja Kganyago announces a cut in the repo rate:

[embedded content]

The governor says they welcome the government’s risk-based approach to the lockdown to resuscitate the supply side of the economy.

“The health crisis also became an economic crisis and we were in a fortunate position. Because firstly, we as a flexible inflation targeter, had decided to change the narrative over the past two years. We said we would like to see inflation anchored closer to the mid -point of the inflation target range. That gave us this space and when we were faced with this shock we were able to relax monetary policy very rapidly,” explains Kganyago.

Source: SABC News (sabcnews.com)