Reserve Bank cuts repo rate

The SA Reserve Bank's monetary policy committee has unanimously voted to reduce the repo rate from 6.5% to 6.25%. As a result of the cut the prime rate will fall to 9.75%. 

The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks. Before Thursday, the last time the bank changed the rate was in July 2019, when it was cut by 25 basis points to 6.5%. The rate stayed unchanged at 6.5% at the MPC's two previous meetings in September and in November.

The announcement that the rate would drop by 25 basis points was made by the central bank's governor Lesetja Kganyago in Pretoria on Thursday afternoon. Kganyago said the decision was unanimous. 

The governor painted a bleak picture about the state of SA's struggling economy. He said electricity supply constraints would keep economic activity muted, while business confidence remained weak.  

The bank now estimates that SA's GDP will only expand by 0.4% in 2019. GDP outlooks for 2020 and 2021 were also downgraded to 1.2% and 1.6%. 

Ahead of the announcement on Thursday, some analysts had predicted that the rate would remain unchanged at 6.5%.  The decision was "not as the market expected," said TreasuryONE in a note to clients. 

ZAR/USD
17.14
(-1.45)
ZAR/GBP
21.79
(-0.95)
ZAR/EUR
19.94
(-0.99)
ZAR/AUD
12.04
(-0.88)
ZAR/JPY
0.16
(-1.20)
Gold
1860.32
(-0.35)
Silver
22.95
(-1.01)
Platinum
840.00
(-0.51)
Brent Crude
42.26
(+0.47)
Palladium
2196.84
(-0.50)
All Share
53233.42
(-1.87)
Top 40
49215.35
(-1.82)
Financial 15
9414.69
(-1.81)
Industrial 25
72355.50
(-2.52)
Resource 10
53042.54
(-0.87)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1364 votes
It depends on how the funds are used.
73% - 8839 votes
No. We should have gotten the loan elsewhere.
16% - 1953 votes
Vote