Reserve Bank Repo Rate to 6.25% | Prime at 9.75%
The South African Reserve Bank’s move to cut its benchmark interest rate for the first time since July has been welcomed, but economists believe more needs to be done as inflation is forecast to remain within the target and the economy is barely growing.The monetary policy committee unanimously voted to lower the repo rate to 6.25% from 6.5%, Governor Lesetja Kganyago told reporters on Thursday in Pretoria.
The prime rate will also fall to 9.75%.
“The decision today to reduce interest rates by 25 basis points will help to underpin business and consumer confidence,” said North West University Business School economist Professor Raymond Parsons.“It is a welcome recognition of the need to reduce borrowing costs for business and consumers in SA. Although it is a small step in the bigger scheme of things in the SA economy, it can help to underpin business and consumer confidence at the present juncture,” he said.“In view of existing pressures on the economy the psychological impact of a modest interest rate cut will currently be greater than its real economic effect. But it is nonetheless positive.”
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