This latest piece of news will come as a relief to South African consumers as the Monetary Policy Committee (MPC) announced during a press meeting held in Pretoria this week, that it will reduce the repo rate by 25 basis points to 6.5 percent in line with market expectations.

SA News reports that the newly re-appointed Governor of the Reserve Bank, Lesetja Kganyago, said that the discussion in the MPC were either to cut the repo rate by 25 percent basis point or to keep it unchanged at 6.75 percent.

“The MPC unanimously decided to reduce the repurchase rate by 25 basis points to 6.5 percent per annum, with effect from 19th July. There was no discussion on a 50 basis point rate cut,” explained Kganyago

Furthermore SA News said that the decision to cut the repo rate follows the November 2018 repo rate increase made by the central bank to stem inflation pressures.

Whereas in a meeting held in May, the MPC said the implied path of policy rates generated by the Quarterly Projection Model was for one cut of 25 basis points to the repo rate by the end of the first quarter of 2020, adds the publication.

“The implied path of policy rates generated by the Quarterly Projection Model was for one cut of the 25 basis points to the repo rate by the end of the fourth quarter of 2019. The endogenous interest rate path is built into the growth and inflation forecast, said Kganyago.

The Reserve Bank adds that it now expects Gross Domestic Product (GDP) growth for 2019 to average 0.6 percent down from 1.0 percent in May, while the prediction for 2020 and 2021 is unchanged at 1.8 percent and 2.0 percent respectively.

[Source – SA News] [Image – CC 0 Pixabay]