The South African Reserve Bank (SARB) has cut the repo rate by 25 basis points.
The repo rate is now 3.5% a year effective from the 24th of July.
After a three-day-long meeting in Pretoria this week, the SARB’s Monetary Policy Committee took the decision to lower the repo rate due to the economic impact by the COVID-19 pandemic.
In a statement, the SARB’s governor, Lesetja Kganyago explained the Committee’s decision on Thursday.
“The implied path of policy rates over the forecast period generated by the (SARB) Quarterly Projection Model indicates one repo rate cut of 25 basis points in the fourth quarter of 2020 (and) remaining unchanged in the first quarter of 2021.”
This is the lowest that the repo rate has been since 1998.
The Mail & Guardian reports that Kganyago said that inflation is well contained and that, for the next two years, the bank does not see inflation as a problem, because it is within the target range.
Kganyago further went on to say that even if the lockdown is relaxed in the coming months, investment, exports and imports are expected to decline sharply for the year as a whole. Job losses are also expected to rise further.
Credit image: Brand South Africa and Twitter.