Charles Molele
The Monetary Policy Committee of the SA Reserve Bank has unanimously decided to cut the repo rate by 100 basis points, bringing the country’s repo rate to 4.25%, its lowest since 1973.
The decision to cut the repo rate follows the emergency meeting of the MPC, which was held in the wake of the economic fallout from the global Covid-19 pandemic, the biggest shock to the global economy since the Lehman Brothers’ bankruptcy.
Reserve Bank Governor Lesetja Kganyago said on Tuesday that the cut will come into effect on April 15.
Kganyago said since the last MPC meeting in March, the Covid-19 pandemic has spread globally and its impact is being felt through all economies.
“Current estimates from the IMF show global growth contracting this year by about 2.9%. Economic contractions are expected to be deepest in the second quarter of 2020, with some recovery expected in the third quarter of the year,” said Kganyago.
“The strength of the recovery into the fourth quarter and 2021 will depend on how quickly countries are able to open up for economic activity safely, requiring sustainable social distancing rules, safety processes put in place by businesses and public institutions, and capacity of hospitals to accommodate those in need.”
The next statement of the MPC will be released on21 May2020.
The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks.
To view the full Monetary Policy Review, click here http://bit.ly/2RgmQEY.
