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)
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)

SA Reserve Bank slashes interest rates by 50 basis points

By Ashley Lechman Time of article published May 21, 2020

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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.


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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