A related point is that, in a low interest rate environment, supervisors have seen a need to be particularly vigilant against a build-up of risk in interest sensitive sectors. A number of them have been taking measures in recent times to respond to developing risks, often focused on property lending. I will have more to say about that later.
South African policymakers are fully aware that we have to avoid the risk of becoming trapped in what Christine Lagarde, the MD of the IMF, has termed the “new mediocre”. The budget, which was tabled in February, reinforces the need to provide support to economic growth, albeit against a background of deteriorating prospects for tax revenue collection.