SARB's MPC announces first repo rate cut in 4 years

JOHANNESBURG - The central bank’s Monetary Policy Committee has decided to cut the repo rate by 25 basis points, which will take effect from Friday. 

This is the first cut in four years and brings it down from a 15-year high of 8.25%.

The MPC, which has been meeting since Tuesday, said its decision was influenced by several factors, including stable electricity and inflation remaining under 5%.

The six-member MPC of the reserve bank unanimously cutting the repo rate by 25 basis points basically means that the cost of borrowing for banks will decrease. 

This will possibly lead to lower interest rates on loans and mortgages for consumers and businesses. 

Consequently, individuals may find it cheaper to finance purchases or investments, potentially stimulating spending and economic activity.

Since November 2021, borrowing costs have surged by approximately 475 basis points, putting considerable strain on consumers and the economy as a whole. 

The committee’s latest decision aims to alleviate some of that pressure and stimulate economic growth.