Overindebted consumers breathed a sigh of relief as the Reserve Bank decided to but the repo rate after 16 months of no change.
The Reserve Bank has decided to cut the repo rate by 25 basis points as economists expected, giving South African consumers some breathing room after the repo rate remained at 8.25% since May last year.
Lesetja Kganyago, governor of the South African Reserve Bank (Sarb) announced the reduction of 0.25% in Pretoria on Thursday afternoon.
The announcement followed a decision by the US Federal Reserve last night to cut the US rate by 50 basis points.
“In discussing the repo rate stance, Monetary Policy Committee (MPC) members considered an unchanged stance, a 25 basis point cut and a 50 basis point cut. The MPC ultimately reached consensus on 25 basis points, agreeing that a less restrictive stance was consistent with sustainably lower inflation over the medium term.”
Although inflation decreased to 4.4% in August as announced yesterday, Kganyago says this did not matter much.
“What matters is what inflation will do going forward. We must have the right policy stance in that regard and consider all the risks that inflation can increase again.”
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