Beyond the well-known impact that negative interest rates can have on the allocation of financial resources to different sectors of the economy, or on the price of financial assets, it also important to point out their impact on the attractiveness of savings, especially in a country like South Africa, where the low level of domestic savings remains a factor behind the elevated structural current account deficit.
All in all, these factors have led the Reserve Bank to embark on a gradual policy normalisation process, though one that remains data-dependent, as it acknowledges the complex factors behind the price outlook.