More capital for households as SA Reserve Bank relaxes monetary policy

JOHANNESBURG – The SA Reserve Bank (Sarb) has slashed interest rates further by 50 basis points to 3.75 percent as the central bank relaxes monetary policy to free up more capital for households impacted by the coronavirus (Covid-19) pandemic.

This is the fourth interest rate cut this year as the Sarb tries to provide financial relief for households distressed by the economic downturn.

Sarb governor Lesetja Kganyago said despite sustained higher levels of country financing risk, economic contraction and slow recovery would keep inflation well below the midpoint of the target range for this year.

Kganyago said the overall risks to the inflation outlook at this time appear to be to the downside, but less clearly so compared to conditions in March and April.

The bank’s headline consumer price inflation forecast averaged 3.4 percent for 2020, and 4.4 percent in 2021 and 2022.