First, it provides a strong commitment by the Eurosystem to implement the PSPP in all eligible jurisdictions. Second, it curbs expectations about future government bond yields falling below the deposit facility rate, which could ultimately have a negative effect on banks’ incentives to sell government bonds.
It is also not in dispute that the repo rate, the rate at which the South African Reserve Bank will lend to the banks, was increased recently, primarily on account of deteriorating risks to the outlook for inflation.