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Economists express mixed views on another rate cut ahead of MPC announcement

The Sarb has reduced the interest rate by 300 basis points so far this year in an effort to promote growth amid an economy suffering under the effects of the COVID-19 lockdown.

South African Reserve Bank (Sarb) Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG – The South African Reserve Bank (Sarb) is set to announce on Thursday whether it will drop the repo rate once again or keep it at 3.5%.

The Sarb has reduced the rate by 300 basis points so far this year in an effort to promote growth amid an economy suffering under the effects of the COVID-19 lockdown.

Reuters has consulted 25 economists on whether they think the central bank will lower the repo rate by 25 basis points. There appears to be mixed sentiment, with 15 economists expecting the repo rate to remain unchanged, while 10 expect a 25-basis point cut.

President Cyril Ramaphosa noted on Wednesday night that drastic cuts in the repo rate had helped cash-strapped consumers navigate through the effects of the COVID-19 pandemic.

This, along with bond relief from banks, has helped South Africans survive the loss of income and a difficult economy.

It remains to be seen whether the Reserve Bank will continue this downward trend on Thursday afternoon, with those with investments hoping this is not the case.

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