He was speaking on the SABC’s Metro FM on Tuesday night.
Kganyago says very low interest rates will discourage people saving money, as well as those wanting to earn interest on their investments.
The bank has already lowered the prime lending rate by 275 basis points this year and increased its holdings of South African government debt to lower borrowing costs for both government and consumers.
Despite sustained higher levels of country financing risk, the Committee notes that the economic contraction and slow recovery will keep inflation well below the midpoint of the target range for this year. #MPCStatement #MayMPC pic.twitter.com/TZapx3HaDt
— SA Reserve Bank (@SAReserveBank) May 21, 2020
“The truth of the matter is, for people who are putting money in the bank, they expect rate to at least compensate them for inflation. If they don’t put money in the bank, you and I who are borrowers, will have no one to borrow from. The money we borrow from the bank, is from depositors … not a good idea for rate to go close to zero,” he explains.
Click below to listen to the full podcast: