MPC opts to cut repo rate by 25 basis point to 7%

JOHANNESBURG - The South African Reserve Bank’s monetary policy committee (MPC) has unanimously decided to cut the repo rate by 25 basis points, in line with market expectations.

This brings the central bank’s benchmark rate down to 7%, while the prime lending rate for commercial banks will drop to 10.5%.

The MPC deliberated on policy rates during its bi-montly meeting this week.

Reserve Bank Governor Lesetja Kganyago announced the latest adjustment on Thursday afternoon.

He said that tamer inflation and a stable rand against the dollar were among factors that gave the MPC some room.

"Against this backdrop, the MPC decided to reduce the policy rate by 25 basis points, to 7%, with effect from the 1st of August. The decision was unanimous."

The MPC's decision comes after the US Federal Reserve kept its rate unchanged, with Kganyago cautioning that global uncertainty was still a concern.

"For the major central banks, policy is generally in a wait-and-see phase. In the United States, there are signs of new inflationary pressures from tariffs. Monetary policy remains 'modestly restrictive'. In Europe, by contrast, inflation is lower, and policy is more neutral. All the major central banks kept their policy rates unchanged at their most recent meetings."