'Despite the general rise in risk, the significantly lower forecast for headline inflation has created space for monetary policy to respond to the rapid deterioration in economic conditions.'
The bank now forecasts GDP to contract for the whole of 2020 before rebounding to 1% and 1.6% the next two years. This is sharply down from its previous estimates of 1.2% in 2020, 1.6% in 2021 and 1.9% in 2022.
Though the rate cut is likely to bring much-needed relief to consumers and businesses, there is scepticism that monetary policy alone can do much to buffer SA from the coronavirus-inspired crisis.
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