🔓 ANALYSIS | The Bank has rapidly used all its weapons while the government dithers on macro-economic policy
The Reserve Bank’s leadership under governor Lesetja Kganyago has attracted criticism for its reluctance to cut interest rates. But their prudence of the past few years has given them the space to act against the Covid-19 crisis.It was a tale of two press conferences on Tuesday morning.
It will in coming months bring relief to many indebted businesses and households – especially on top of the willingness that banks have shown to assist customers to manage their debt during the lockdown. The Bank’s leadership is normally very cautious and measured and under governor Lesetja Kganyago has attracted criticism from some quarters for its reluctance to cut interest rates. As the coronavirus crisis has shown though, he and his team are swift to act when they need to do so – and their prudence of the past few years has given them the space to act.
Just three weeks ago at its last MPC meeting the Bank was still forecasting positive, if minimal economic growth of 0.2%. But that was before the first lockdown was declared and subsequently extended. Now, the Bank has cut its forecast to a negative 6.1% – which is multiples worse than the minus 1.5% economic contraction SA saw during the global financial crisis a decade ago. The Bank wouldn’t put numbers to unemployment but it expects that at least a million jobs will be lost this year.
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