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Economists predict Sarb repo rate cut the first of many

The Reserve Bank surprised economists on Thursday by lowering the repo rate by 25 basis points to 6.75%.

FILE: Reserve Bank Governor Lesetja Kganyago. Picture: Renart Toerien/EWN.

CAPE TOWN – Some economists predict that Thursday’s repo rate cut may just be the first in a string of lower rates to come.

The Reserve Bank surprised economists on Thursday by lowering the repo rate by 25 basis points to 6.75%.

The prime lending rate, which is the interest charged by banks to clients, will drop from 10.5% to 10.25%.

Economist Dennis Dykes says: “A little bit surprised given the previous stance which had been very cautious in the last few meetings.

“But nevertheless, I think it’s probably the right decision, given that growth is so weak at the moment and also the fact that we’ve seen inflation come off a lot more than had been anticipated. So I think it’s not a bad decision.”

Market analyst George Glynos says that depending on the fiscal outlook, indebted consumers could be in for further relief.

“I suspect that we will an inflation rate that would make it very easy them. I think that we could see as much as a further 75 to 100 basis points of cuts between now and quarter one.”