The SARB is cognisant of the fragile economic situation, and to the extent that its decisions remain consistent with its mandate of ensuring price stability, it takes appropriate actions to support economic activity. The 25 basis points cut in the repurchase rate in July, which had been made possible by an improvement in the inflation outlook, illustrates this approach.
As a group, community banks are also important to the nation’s financial stability, a particular focus and responsibility of the Federal Reserve. Although it was not the case in the current crisis, instability can be generated by small institutions as well as by large ones – as occurred in the Great Depression or in the thrift crisis, to cite two particularly dramatic examples.