Johannesburg – The South African Reserve Bank has further slowed its purchase of government bonds in August, purchasing only R353-million of securities to bring its total holdings to 38.737 billion, data showed on Monday.
A deep sell-off of government debt in March and April, as the coronavirus struck, saw the central bank announce emergency liquidity measures, including a quantitative easing style purchase of bonds in the secondary market.
By July, the bank had bought R2.5-billion worth of bonds.
In the first few months of the scheme, the bank’s bond purchases were at an average of R10-billion per month, but the pace has since slowed as market conditions normalised and bond yields fell back below 10%.
At the bank’s last policy-setting meeting in July, where the Reserve Bank (SARB) lowered the lending rates to a record low 3.50%, Governor Lesetja Kganyago stressed the bond-buying program was aimed at normalising liquidity rather than a QE-style financing of the government’s ballooning budget deficit.
There have been growing calls for the bank to support the economy and employment as the impact of Covid-19 threatened to drag the economy deeper into a recession which began before the pandemic.
A bill to nationalise the bank, which has been fiercely fought by the regulator, is currently being debated in parliament.
It is seen by some analysts as a forerunner to changing the bank’s mandate of inflation-targeting and currency stability.
