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Repo rate reduction seen as good move for economy

Reserve Bank Governor Lesetja Kganyago announced a reduction in the repo rate of 100 basis points to 5.25%.

SA Reserve Bank Governor Lesetja Kganyago. Picture: Gaye Davis/EWN

JOHANNESBURG - The decision by the Reserve Bank to reduce the repo rate by 100 basis points is being seen as a significant first move to bring relief to the struggling economy.

Reserve Bank Governor Lesetja Kganyago announced a reduction in the repo rate of 100 basis points to 5.25%.

Standard Bank chief economist Goolam Ballim said this was a good move.

“The Reserve Bank had room to cut rates given that both nominal and real rates in South Africa are fairly high.”

But chief economist of Econometrix Azar Jammine said this may not be enough to help many businesses.

“The cut in interest rates alone, even if it was 200 basis points, would not be sufficient to salvage a potentially disastrous situation for a lot of businesses and consumers in the country.”

(Edited by Refilwe Pitjeng)