SA Reserve Bank cuts interest rates
The Monetary Policy Committee of the South African Reserve Bank has unanimously decided to cut interests rates.
Governor Lesetja Kganyago announced the decision on Wednesday.
"While the Committee would like to see inflation expectations anchored closer to the mid-point of the inflation target range on a sustained basis, the lower inflation forecast and improved risk profile opens some space to provide further policy accommodation to the economy."
"Against this backdrop, the MPC decided to reduce the repurchase rate by 25 basis points. The decision was unanimous."
The repo rate is now 6.25%, meaning the prime lending rate is 9.75%. Kganyago also gave an economic outlook.
"While the rand has benefited from improvements in global sentiment, high long-term bond yields reflect concerns about domestic growth prospects and fiscal risks.
"The GDP growth outcome for the third quarter confirmed that the economy remains weak and vulnerable to idiosyncratic shocks and poor sectoral performances."
"While growth in the fourth quarter is expected to have picked up, electricity supply constraints will likely keep economic activity muted in the near term."
The forecast of GDP growth for 2019 is revised lower to 0.4% (from 0.5%). The forecasts for 2020 & 2021 have also decreased to 1.2% (from 1.4%) and 1.6% (from 1.7%), respectively, due to lower growth than previously expected in Q 3 & 4. The GDP forecast for 2022 is 1.9%. pic.twitter.com/OujytW659K
— SA Reserve Bank (@SAReserveBank) January 16, 2020
