JOHANNESBURG - South African Reserve Bank (Sarb) governor, Lesetja Kganyago, on Thursday afternoon announced the bank's latest decision on interest rates for the country.
The decision follows the three-day meeting of the Sarb's Monetary Policy Committee (MPC) which Kganyago chairs.
Kganyago announced the Reserve Bank will be cutting interest rates by 50 basis points, thus taking the repo rate to 3.75% per annum.
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.
In April, Kganyago announced 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.
%%%twitter https://twitter.com/hashtag/MPCStatement?src=hash&ref_src=twsrc%5Etfw">#MPCStatement #MayMPC pic.twitter.com/ErHeAX6xkz
— SA Reserve Bank (@SAReserveBank)
Many economists had expected the central bank to cut interest rates by 50 basis points.
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."
He added: "Lowering the repo rate by too much too soon may put the Rand exchange rate under pressure and causes large capital outflows."
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