Fed tapering won't force SA Reserve Bank to shift gears just yet

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Reserve Bank Governor Lesetja Kganyago.
Reserve Bank Governor Lesetja Kganyago.
Gallo Images/Ziyaad Douglas

The US Federal Reserve Bank plans to start scaling back or tapering its asset purchases soon, but this decision has not influenced the South African Reserve Bank's (SARB) own monetary policy decisions just yet, according to Governor Lesetja Kganyago.

The Fed intends to start withdrawing policy responses to the Covid-19 pandemic for the US economy, and tapering could start as early as its next meeting - scheduled for November - and would end by mid-2022, its chairperson Jerome Powell said at this week's Federal Open Market Committee (FOMC) meeting.

But this decision was not factored in by the SARB's Monetary Policy Committee (MPC) when it met this week, according to Kganyago, who was speaking during a briefing on the repo rate which has been kept on hold. The SARB, however, will be monitoring the impact of the Fed's decision as well as the normalisation of monetary policy by advanced economies, on domestic inflation.

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