SARB governor Lesetja Kganyago
Photo by: Reuters
The South African Reserve Bank's monetary policy committee has cut the benchmark repo rate by 25 basis points to 6.5% from 6.75%.
This is the first time since March 2018 that the benchmark interest rate has been cut.
The central bank's governor Lesetja Kganyago made the announcement at a media briefing in Pretoria on Thursday afternoon. The cut will come into effect on July 19. The decision was unanimous.
The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks. Changes in the repo rate affect the prime lending rate, which is the lowest rate at which banks start lending to clients. With the repo rate down, the prime lending rate will decline to 10% from 10.25%.
Kganyago's decision was widely anticipated by analysts. In a Bloomberg survey 18 out of 22 economists predicted a cut.
The governor said that, based on short term indicators, a rebound of GDP is expected in the second quarter of the year. This after GDP contracted by 3.2% in the first three months of the year.
He said that the central bank now expects South Africa's economy to grow by 0.6% in 2019.