Tag: South African Reserve Bank (SARB)

The Monetary Policy Committee (MPC) once again unanimously voted in favour of lowering the repo rate this month, although 2 out of the 5 members preferred a shallower cut. In a vote of 3 to 2, the MPC decided to lower the repo rate by 50bp to 3.75%.

The world is facing one of its gravest crises in recent memory as it stares down COVID-19 and the wealth management industry has a key role to play by steadying the investment ship and navigating investors’ safely through this storm.

President Cyril Ramaphosa presented the five-level, risk-adjusted strategy that will guide South Africa’s emergence from lockdown. As the finer points of the strategy were shared, it became clearer how - and when - certain sectors will once again gear up into activity.

TransUnion reports that consumer credit extension in South Africa is currently around R1.8 trillion, with approximately 9% of this debt at least three months in arrears. In addition, around 45% of the approximately 22.5 million credit-active consumers have impaired credit records.

The case for economic recovery out of the deep COVID-19 recession has been given a confidence boost by the Government’s decisive response to the crisis. The praise being showered on President Cyril Ramaphosa’s steps taken to unlock the economy and the economic stimulus packages to address the impact of the COVID-19 pandemic should give the country confidence that we are moving in the right direction.

South African investors are still absorbing the twin blows of being downgraded by Moody’s into junk territory and, just four days later, the expected Fitch decision to take the South African sovereign debt rating down a further notch into junk territory.

SAICA hosted a webinar on 6 April 2020 where Chief Economist for Investec Bank Limited South Africa, Annabel Bishop, spoke about the effects of Sub-investment grade Status and the Coronavirus on our country’s already struggling economy.

The global COVID-19 pandemic has made its presence felt in South African retail and consumer-focused businesses, especially in tourism and hospitality, but the full impact on earnings, cash flow and employment will last far longer than the initial lockdown.

In response to the COVID-19 emergency, the South African Reserve Bank (Reserve Bank) and the South African financial sector regulators, the Prudential Authority and the Financial Sector Conduct Authority (FSCA), have implemented several mitigation measures to support the economy and companies.

The Covid-19 crisis has brought much of the world economy to a sudden stop. Millions upon millions of people are in lockdown across the world, preventing them from working, buying, producing and selling goods and services. Global and local supply chains are interrupted, and small and large companies see a collapse in income. Households are under similar pressure.