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Kganyago hails Sarb's speedy response to COVID-19 crisis

South African Reserve Bank Governor Lesetja Kganyago said that the bank's COVID-19 response could be described as aggressive.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: AFP

CAPE TOWN - South African Reserve Bank Governor Lesetja Kganyago said that the bank's COVID-19 response could be described as aggressive.

Kganyago was addressing the Cape Town press club in a virtual presentation on Wednesday.

He said that the bank had implemented various measures in response to the COVID-19 pandemic.

"The cumulative reduction in the repo rate for 2020 is now 300 basis points if we then include the July reduction in the policy rate."

Kganyago said that the reserve bank had responded to the crisis speedily.

"You will find that other emerging markets' response, then the median is about 100 basis points. If you look at the spectrum of emerging markets' central banks, then our response can be characterised as having aggressive. The repo rate is now at its lowest on record."

And even though there have been calls for the bank to consider quantitative easing, Kganyago said that this approach would not make sense.

"Our industries are not zero, our inflation is not zero, quantitative easing is not what we wish to embark on but let's suppose at the start we decided that it's a cool thing to do, so this is how it works: we buy government bonds, the cash is with the banking industry, well as it stands now, we have pumped in a lot of liquidity and banks are sitting on liquidity."

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