SA Reserve Bank Cuts Repo Rate By 50 Basis Points

THEBE MABANGA

THE SOUTH AFRICAN Reserve Bank has cut the repo rate by 50 basis points in a move that is likely to reinforce its hawkish, or conservative, monetary policy stance.

The bank’s Governor Lesetja Kganyago said three members of the Monetary Policy Committee (MPC) preferred 50 basis points cut while the other two preferred a 25 basis point.

The central bank also announced that its Quarterly Projection model, an internal policy guide that it uses, projects two cuts of 25 basis points each over the next two quarters.

The latest cut leaves the repo rate at 3.75 % even as economic outlook worsened while inflation outlook improved.

The Reserve Bank now expects the South African economy to contract by 7% in 2020, compared to 6.1% when the MPC met in April.

At the same time, the bank expects inflation to hover around 4.5% the mid-point of its 3% to