MPC cuts repo rate by 25 basis points
The South African Reserve Bank has cut the repo rate by 25 basis points to 7.75%.
The rate cut means the prime lending rate will be 11.25%.
The decision comes a day after consumer inflation dipped below 3% for the first time since 2020, easing to 2.8% in October, lower than the bank's inflation target range of between 3% and 6%.
Governor Lesetja Kganyago said they have decided to take a cautious approach as the inflation outlook remains highly uncertain.
"In the near term, inflation appears well contained. However, the medium-term outlook is highly uncertain, with material upside risks. These include higher prices for food, electricity and water, as well as insurance premiums and wage settlements.
"The committee agreed that reducing the level of policy restrictiveness is still consistent with achieving the inflation target. The risk outlook, however, requires a cautious approach.
READ: Economist weighs in on repo rate
"Global interest rates could well shift higher again, and the recent rand depreciation demonstrates how rapidly changes in the global environment can affect South Africa."
The governor says the decision by the Monetary Policy Committee was unanimous.
There had been calls from some quarters for a 50-basis point cut.
"Unlike in the previous meeting, there was no discussion about 50-basis points. It didn't even feature. You ask, 'Why wouldn't that be cautious?' I think 25-basis points is more cautious, and the environment is uncertain, and it calls for caution,” Kganyago explained.
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