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BusinessLive reports that in a widely expected move, the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) announced on Thursday a 25 basis-point cut in its benchmark repo rate, lowering it to 8%.
Sustained moderation in consumer inflation over the past few months, a marked improvement in the inflation outlook and the commencement of rate-cutting cycles by major central banks created space for the Bank to cut rates for the first time since May 2023, when the MPC raised it by 50 bps to 8.25%. Economists said that Thursday’s decision was marginal in terms of present high borrowing costs, but represented a positive turning point in the interest rate outlook. The Bank is likely to implement a further 25 bps cut at the MPC’s November meeting. Economists predict more similar cuts in 2025. “Monetary policy is still in restrictive territory, but the SARB has now recognised that the time has come for interest rate policy to begin to adjust to a largely improved inflation outlook. The timing and pace of further interest rate reductions by the MPC will obviously remain data driven, but are now likely to continue if the inflation outlook continues to improve,” commented economist Prof Raymond Parsons. SARB governor Lesetja Kganyago said there had been welcome developments globally, but there were still risks, including an unpredictable geopolitical environment. As a result, central banks were moving “carefully, and policy stances remain relatively tight”.
- Read the full original of the report in the above regard by Denene Erasmus at BusinessLive
- Read too, Reserve Bank cuts repo rate by 25 basis points thanks to diminished risks, at The Citizen
Get other news reports at the SA Labour News home page