WATCH: SA Reserve Bank slashes interest rates by 1%

JOHANNESBURG – In the wake of the national disaster that South Africa finds itself in because of the coronavirus outbreak in the country and globally, all eyes were on South African Reserve Bank (SARB) governor Lesetja Kganyago as he announced today, the bank’s latest decision on interest rates following the three-day meeting of the SARB’s Monetary Policy Committee (MPC) which he chairs.

The struggling economy needed a boost by the MPC announcement to reignite growth as the country faces a tough few months ahead, as many economists expressed before the announcement.  

Kganyago announced that the MPC decided that Sarb would be cutting interest rates by 100 basis points. 

This takes the repo rate to 5.25% which will take effect from 20 March 2020, and the prime lending rate will now drop to 8.75%. 

Kganyago said, “The implied path of policy rates over the forecast period generated by the Quarterly Projection Model indicated three repo rate cuts of 25 basis points each in the second and fourth quarter of 2020, as well as in the third quarter of 2021. Monetary policy can ease financial conditions and improve the resilience of households and firms to the short-term economic implications of Covid-19.  Our decision and its magnitude seeks to do this in the near term.”