SA RESERVE BANK CUTS INTEREST RATES

Cape Town – The monetary policy committee of the SA Reserve Bank has reduced interest rates by 25 basis points. This means the repo rate (Interest rate at which the Reserve Bank lends money to commercial banks and the prime rate the rate at which commercial banks lend money to borrowers.) is now 6.5% and the prime lending rate.

Speaking in Pretoria on Wednesday after the conclusion of the three-day meeting of the bank's Monetary Policy Committee, SARB governor Lesetja Kganyago said the MPC in a split decision decided to lower the repo rate. Kganyago said the inflation forecast of the bank has shown a moderate improvement. Indications are that a low point of the inflation cycle has been reached. The main changes in the forecast relate to the exchange rate, among others things, he said. He also cautioned that the SARB's 5-year inflation expectations have declined. Kganyago said the MPC would prefer its inflation expectation anchor closer to the mid-point of the target range of 3% to 6%.