South African Reserve Bank governor Lesetja Kganyago. Picture: PUXLEY MAKGATHO
With the global economy at a virtual standstill and some analysts starting to talk about deflation, it’s unlikely the Bank’s forecasts will show anything alarming on inflation. The oil collapse should also put downward pressure on prices. History isn’t a useful guide, as the evidence from previous crises is mixed. The Asian financial markets crisis in the late 1990s brought with it a currency crash and interest rates above 20%.
But is it a given? Market reaction to the 50 basis-point cut in the US earlier in March, and the subsequent signs of dislocation in money markets, would seem to indicate there is a lack of confidence in the use of monetary policy tools as an appropriate or effective reaction to the coronavirus crisis.European Central Bank , Christine Lagarde, came under attack for not doing the same thing, merely announcing measures to support bank lending.
But that ignores one crucial factor. We don’t print the world’s reserve currency and our bonds are far from being regarded as safe havens. It was almost nine years ago that
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