Reserve Bank cuts repo rate by 50 basis points

The Reserve Bank has cut interest rates by 50 basis points. Reserve Bank Governor, Lesetja Kganyago made the announcement a short while ago. The third cut this year will bring some relief to consumers during the COVID-19 lockdown. Investec chief economist Annabel Bishop joins us now for more analysis on the MPC. Courtesy #DStv403

JOHANNESBURG - The South African Reserve Bank has slashed the repo rate by 50 basis points.

Reserve Bank Governor, Lesetja Kganyago announced the Monetary Policy Committee's decision on Thursday.

“Against this backdrop, the MPC decided to cut the repo rate by 50 basis points, taking it to 3.75% per annum, with effect from 22 May 2020. Three members preferred a cut of 50 basis points and two preferred a cut of 25 basis points,” said Kganyago.

The interest rate cut comes as the SARB eases the economic implications of COVID-19 for consumers.

LIVESTREAM: Reserve Bank announces interest decision

Meanwhile, the Reserve Bank said it expects investment, exports, and imports to decline sharply as the lockdown is eased. 

Kganyago added that massive job losses were on the cards.

“Easing of the lockdown will support growth in the near term and some high-frequency activity indicators show a pickup in spending from extremely low levels. However, getting back to pre-pandemic activity levels will take time. GDP is expected to grow by 3.8% in 2021 and by 2.9% in 2022,” he said.

The next MPC decision will be in July.