Interest rate
Lockdown restrictions likely to mute economic growth in Q1 - Kganyago
South African Reserve Bank Governor Lesetja Kganyago said that it would take time for the country to get back to pre-pandemic output levels.
South African Reserve Bank Governor Lesetja Kganyago announced on Thursday that the repo rate would remain unchanged at 3.5%.
Kganyago made the announcement during a briefing on Thursday afternoon.
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 Governor Lesetja Kganyago said that the bank's COVID-19 response could be described as aggressive.
Reserve Bank Governor Lesetja Kganyago said that the bank would continue to monitor growth, inflation and other economic data before deciding on the direction of the repo rate in the future.
With the repo rate being cut by another 25 basis points, prospective home owners are now looking at their options as houses become more affordable.
Last month, the central bank cut the repo rate by 100 basis points.
The repo rate is the rate at which the central bank lends money to commercial banks.
The crucial question is will the reserve bank be aggressive when cutting the repo rate to help accelerate the economy?
The decision follows this week's Monetary Policy Committee meeting.
Reserve Bank Governor Lesetja Kganyago cited a number of concerns, including stagnant growth and other headwinds for keeping the repo rate unchanged at 6.5%.
Those in debt have received some relief on Thursday afternoon with the South African Reserve Bank (Sarb) decreasing the repo to 6.5%.
In November the repo rate was increased by 25 basis points to 6.75% with governor Lesetja Kganyago listing rising inflation and the weak rand as major factors.
With global growth weakening, some economists expect no change in South African policy across the forecast horizon.
The Reserve Bank increased its benchmark lending rate for the first time in nearly three years in November.
Consumers are already facing a substantial rise in the cost of living with rising fuel prices and increased VAT and bondholders are worried about further financial pressure.
All 25 economists surveyed in the past week predicted the central bank will hold rates at 6.50% at its 24 May meeting, which will follow last month’s losses by the rand and renewed weakness on Tuesday.
The repo rate is the rate at which the central bank lends money to commercial banks.