Politics

South Africa Reserve Bank slashes interest rates by 50 basis points

JOHANNESBURG, South Africa – Kganyago announced that the Reserve Bank will be cutting interest rates by 50 basis points, taking the repo rate to  3.75% per annum. 

Advertisements

The prime lending rate will now drop to 7.25%. 

At the last emergency MPC announcement  in April, Sarb cut interest rates by 100 basis points, to help the country’s economy that was taking a hit  from the Covid-19 pandemic.  

South African Reserve Bank (Sarb) Governer, Lesetja Kganyago, today announced the bank's latest decision on interest rates for the country.   Thobile Mathonsi African News Agency (ANA)

In April, Kganyago announced that the MPC decided that Sarb would be cutting interest rates by 100 basis points, which saw the  repo rate drop to  4.25 percent per annum.

Many economists expected the central bank to cut interest rates by 50 basis points. 

Bianca Botes, Executive Director at Peregrine Treasury Solutions, said, “All eyes will be on Sarb this afternoon, with a minimum of 50 basis points interest rate cut expected, in an effort to assist the local economy. Deeper than expected cuts by Sarb could cap the rand gains.”

Dr Chris Harmse an economist and chief investment officer at Rebalance Fund Managers, said,

“Although many expect the Reserve Bank to be heavily involved with a stimulation of the economy to prevent a disaster of a devastating recession, poverty and unemployment, the MPC still have to be very cautious. Lowering the repo rate by too much too soon may put the Rand exchange rate under pressure and causes large capital outflows.”

WATCH: 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: