South Africa’s central bank is expected to cut interest rates to a 50-year low on Thursday but resist for the moment political pressure to buy government bonds so the state can spend more to alleviate the impact of the coronavirus pandemic.
A Reuters poll predicts the Reserve Bank (SARB) will lower borrowing costs by 50 basis points to 3.75%, with a 100 bps cut seen as possible. That is on top of 225 bps of rate reductions since March.
It is not expected to announce a shift to quantitative easing (QE), the money-printing policy long pursued by major central banks to stimulate their economies and recently adopted in some other emerging market countries.
Calls for the SARB to begin direct asset purchases are likely to persist, however, including from within the ruling African National Congress party.
“Inside the ANC the finance minister is the lone voice, everyone else is pushing
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