S. Africa cuts interest rate by 100 basis points

Source: Xinhua | 2020-04-15

The Monetary Policy Committee (MPC) of the South African Reserve Bank has cut the country's repo rate by 100 basis points, the Reserve Bank Governor Lesetja Kganyago announced on Tuesday.

Kganyago cited weak economic growth and the decision of the rating agencies to downgrade South Africa as some of the reasons for the repo rate cut.

"This takes the repo rate to 4.25 percent per annum, with effect from April 15, 2020. The decision was unanimous," he said.

Projections showed that repo rates cuts would be taking place in the next coming months.

"The implied path of policy rates over the forecast period generated by the quarterly projection model indicates five repo rate cuts of 25 basis points extending into the first quarter of 2021," he said.

The interest rate cut was aimed at cushioning households from the impact of the current COVID-19 outbreak.

"Monetary policy can ease financial conditions and improve the resilience of households and firms to the economic implications of COVID-19," he said.

Economist Dawie Roodt told Xinhua that the rate cut will make life easy for people in debt and the banks as well.