South Africa\u2019s central bank has room to provide stimulus in the event of a third wave of coronavirus infections, according to governor Lesetja Kganyago.<\/p>\n
\u201cTo the extent that there is a third wave that could hit South Africa and hit its economic activity, we have got the scope to respond,\u201d Kganyago said Thursday in an interview with Bloomberg TV.<\/p>\n
\u201cBut that all depends on the data that we would see when the third wave sets in — if it does come in.\u201d<\/p>\n
The monetary policy committee last week left the key rate at a record low 3.5% for a third straight meeting and signalled that tightening may start sooner than previously indicated.<\/p>\n
That\u2019s even as the country is battling a second wave of infections, after detecting a more infectious strain of the virus known as 501.V2.<\/p>\n
While the central bank flagged the risk of a third wave of infections, Kganyago said that monetary policy doesn\u2019t respond to disease but rather to the fallout of infections on economic activity.<\/p>\n
He said he hoped that the country\u2019s vaccination program would have been rolled out by winter, helping to avert another wave of infections.<\/p>\n
\u2018Humanitarian Crisis\u2019<\/strong><\/p>\n While South Africa\u2019s first vaccinations are due to arrive Feb. 1, it and most other African nations have been slow to procure shots, raising fears that the continent\u2019s recovery will lag behind its trading partners.<\/p>\n \u201cYou can\u2019t vaccinate one part of the world and\u00a0hope<\/span>\u00a0that the world will be safe,\u201d Kganyago said.<\/p>\n \u201cWe are facing a humanitarian crisis and it is important that governments roll out the vaccination program as quickly as possible for the benefit of the global community.\u201d<\/p>\n The bank projects that South Africa\u2019s economy will return to growth in 2021 and raised its forecast despite the reintroduction of restrictions to curb the second wave of the pandemic.<\/p>\n It sees gross domestic product expanding by 3.6% this year, well above the International Monetary Fund\u2019s growth estimate of 2.8%.<\/p>\n The implied policy rate path of the central bank\u2019s quarterly projection model indicates two increases of 25 basis points in the second and third quarters of 2021.<\/p>\n
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