Reserve Bank Repo Rate to 3.75% | Prime at 7.25%
Reserve Bank again cuts repo rate as SA's economic outlook worsens. The Reserve Bank's monetary policy committee has voted to reduce the repo rate for the fourth time this year, from 4.25% to 3.75%. As a result of the cut, the prime lending rate will fall to from 7.75% to 7.25%. The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks.
Reserve Bank governor Lesetja Kganyago said at a briefing on Thursday afternoon that the central bank now expects SA's GDP to shrink by 7% this year. In April, the bank had predicted a 6.1% fall in GDP.
The decrease in the repo rate was widely predicted by analysts as the Reserve Bank seeks to bolster SA's fragile economy by lowering interest rates and upping its bond purchases.
The Reserve Bank expects the easing of the lockdown to support growth in the near term, and sees spending pick up. But getting activity back to pre-Pandemic levels will take time, Kganyago said. GDP is projected to bounce back by 3.8% in 2021 and then ease to 2.9% in 2022. Kganyago added that these uncertain times make economic forecasting "tricky".
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