See More

Marcus: Rate cut right thing to do

Jul 19 2012 16:21 Reuters

Related Articles

Marcus: SA has a lot going for it

Rand weakness biggest inflation risk

Sizeable drop in petrol price expected

Interest rates unchanged

Marcus: CPI limits chances of a rate cut

Sarb director pay takes slight cut

Pretoria - South Africa's Reserve Bank unexpectedly cut its repo rate by 50 basis points to a record low of 5.0% on Thursday, citing a weak outlook for Africa's biggest economy against inflation that is likely to stay within target for an extended period.

The bank said the domestic economy appeared to be slowing further, resulting in a cut in its 2012 growth forecast to 2.7% - in line with the Treasury's forecast - from the 2.9% seen in May.

"Given the possibility of a more widespread global downturn, the risks to this forecast are seen to be on the downside, with the external impact coming through trade links and commodity prices," Reserve Bank Governor Gill Marcus told a news conference.

"The monetary policy committee views the prevailing conditions to be appropriate for further monetary accommodation to the economy that will not undermine the inflation outlook," she said.

Inflation was expected to continue to moderate over the next few quarters, reaching a low of 4.9% in the second quarter of 2013. It was then expected to remain fairly stable around the 5 percent level to the end of 2014.

Twenty-one of 23 economists polled by Reuters last week expected the Monetary Policy Committee to keep the repo rate, at which it lends to commercial banks, unchanged.

Only two of the economists polled saw a 50 basis point cut.

Prior to Thursday's move, the bank had kept rates steady since 2010 and the majority of economists polled had ruled out a cut this year.

The Reserve Bank is scheduled to hold two more policy meetings this year, in September and November.
sarb  |  gill marcus  |  repo rate  |  interest rates  |  sa economy


Lastest Articles

Here is how to check your credit score and manage it Read More...
Top tips to save money over the festive period Read More...
These are the top 5 most fuel efficient cars in SA Read More...
What to consider when switching medical aid schemes

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...