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Reserve Bank Repo Rate to 6.50% | Prime at 10.00%

South African Reserve Bank (Sarb) Governor Lesetja Kganyago has announced that the repo rate has been cut by 25 basis points to 6.5%. The repo rate is the rate at which the central bank lends money to commercial banks.

The prime lending rate, which is the interest charged by banks to clients, is now at 10%.

“The MPC decided to reduce the repurchase rate by 25 basis points to 6.5% with effect from 29 March 2018. Four members preferred a reduction while three members preferred an unchanged stance.” The 25 basis point cut had been expected by traders and economists, after a slowdown in consumer price inflation to 4.0% in February meant price growth was well within the central bank's 3-6% target range.

Kganyago says risks to South Africa's inflation outlook have subsided somewhat since the bank's last monetary policy meeting in January and that the outlook for economic growth is more positive but still challenging.

“The lack of compensation for fiscal drag, weak employment growth as well as by subdued growth in credit extension to households. While consumption expenditure is expected to grow at a slightly slower rate in 2018 compared to last year, the trend over the forecast period is moderately stronger than previously expected, reaching 2.1% in 2020.” 

The central bank last cut rates in July 2017, highlighting an improving inflation outlook, but warning of a slowdown in economic growth.

Consumer inflation, which the bank uses as a guide for deciding rates, has remained within the bank's target of 3% to 6% for the past year and is expected to average 4.9% this year.

For more information on purchasing, renting or investing in commercial and industrial property in Cape Town, please contact Robert Ryll | Cell Number: 082 374 2662 | Landline: 021 552 4100 or Email: rob@primeindustrial.co.za

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