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Sarb slows bond buying to R353m in August

Calls for the bank to do more to support the economy and employment have grown louder.
Image: Moneyweb

The South African central bank further slowed its purchase of government bonds in August, buying 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 bank announce emergency liquidity measures, including a quantitative easing style purchase of bonds in the secondary market.

In July, the bank had bought R2.5 billion worth of bonds.

In the first few months of the scheme, the bank’s bond purchases averaged around R10 billion per month, but the pace has since slowed as market conditions normalised and bond yields fell back below 10%.

At its 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.

Calls for the bank to do more to support the economy and employment have grown louder 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 Sarb’s mandate of inflation-targeting and currency stability.

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It is me or click bait reporting
Calls for the bank to do more to support the economy and employment
have grown louder.
By whom, name the callers

So we’re creating future debt to pay for something we can’t afford. How quaint this quantitative easing. Our children will swear at us if it doesn’t come home to roost earlier via massive currency devaluation. Check the POG in ZAR.

End of comments.

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