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:

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.