Central banks have unleashed unprecedented stimulus in recent years to prop up growth but excessive cash has now pushed inflation to multi-decade highs around much of the world
The unanimous decision by policymakers was in line with market forecasts, but the more hawkish tone struck by Reserve Bank (SARB) Governor Lesetja Kganyago was a noteworthy change.
Headline consumer price inflation increased to 4.4% year-on-year in April, a touch shy of the mid-point of the bank's target range of 4.5%, and its highest level since February last year, data showed on Wednesday.
Analysts polled by Reuters earlier this month expected policymakers to hold fire on interest rates throughout 2021, although a majority see higher borrowing costs at the end of next year.
Some policymakers argue that the steady increase in bond yields is an unwarranted increase while others argue that it is a reflection of what is likely to be a robust recovery in both growth and inflation after the pandemic.
Naturally, the focus on credit conditions in the banking system on the one side and the bond markets on the other is consistent with the main methods used by central banks in steering financing conditions.
If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full.