[ad_1]
Lesetja Kganyago. Image: Gallo Images / Ziyaad Douglas
- South Africa Reserve Bank Governor Lesetja Kganyago said there is room to provide encouragement in the event of a third wave of Covid-19 infections.
- Kganyago said that monetary policy does not respond to the disease but to the consequences of infections on economic activity.
- He said he hoped the country’s vaccination program would have been rolled out by winter, helping prevent another wave of infections.
The Reserve Bank of South Africa has room to provide stimulus in the event of a third wave of coronavirus infections, according to Governor Lesetja Kganyago.
“To the extent that there is a third wave that could hit South Africa and affect its economic activity, we have the scope to respond,” Kganyago said Thursday in an interview with Bloomberg TV.
“But all of that depends on the data that we see when the third wave arrives, if it arrives.”
Last week, the monetary policy committee left the key rate at an all-time low of 3.5% for the third consecutive meeting, noting that the tightening could start earlier than indicated above. That’s even as the country is battling a second wave of infections, after detecting a more infectious strain of the virus known as 501.V2.
While the central bank pointed to the risk of a third wave of infections, Kganyago said that monetary policy does not respond to diseases, but to the consequences of infections on economic activity. He said he hoped the country’s vaccination program would have been rolled out by winter, helping prevent another wave of infections.
“Humanitarian crisis”
While South Africa’s first vaccines are due to arrive in February, it and most other African nations have been slow to get vaccines, raising fears that the continent’s recovery will lag behind its trading partners.
“You cannot vaccinate one part of the world and hope that the world is safe,” Kganyago said.
“We are facing a humanitarian crisis and it is important that governments implement the vaccination program as quickly as possible for the benefit of the world community.”
The bank projects that South Africa’s economy will grow again in 2021 and raised its forecast despite the reintroduction of restrictions to curb the second wave of the pandemic. He believes that gross domestic product will expand 3.6% this year, well above the International Monetary Fund’s growth estimate of 2.8%.
The path of the implicit policy rate of the central bank’s quarterly projection model indicates two increases of 25 basis points in the second and third quarters of 2021
