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Rate cut welcomed

Cosatu says the interest rate cut is in line with its views of job creation.

Reserve Bank Governor Gill Marcus. Picture: AFP.

JOHANNESBURG - Both organised labour and business on Thursday welcomed the South African Reserve Bank (SARB)'s unexpected decision to cut interest rates by 50 basis points.

The repo rate will decrease to 5 percent, from 5,5 percent.

The prime lending rate now stands at 8,5 percent, down from 9 percent.

The Monetary Policy Committee (MPC) indicated it was worried about the global economy.

On Thursday, figures showed inflation was coming down more quickly than previously thought.

Reserve Bank Governor Gill Marcus said it was a tough meeting.

"It was a robust meeting with pros and cons to the decision. But in the end, it was a unanimous decision given the conditions that are prevailing and our concerns going forward."

"The MPC views the prevailing conditions to be appropriate for further monetary policy accommodation to the economy."

DECISION WELCOMED

Congress of South African Trade Unions (Cosatu) spokesperson Patrick Craven said they hope this marks a change in SARB's mindset.

"We hope the bank now appreciates the national priority of job creation."

Federation of Unions of South Africa (Fedusa)'s Dennis George also welcomed the decision.

He said the NPC made a good decision, saying that his organisation had lobbied for a reduction in meetings with SARB.

Meanwhile, Business Unity South Africa said the cut should boost the economy.