The prime rate would decline to 8.5%.
This follows nine consecutive Monetary Policy Committee (MPC) meetings where the repo rate remained unchanged at 5.5 percent, after it was reduced by 650 basis points between mid-2008 and November 2010.
The Sarb determines the interest rate based on its mandate to keep inflation within a target of between three and six percent.
Consumer price inflation was 5.5% for June while producer price inflation was 6.6% in May.
"The MPC views the prevailing conditions to be appropriate for further monetary accommodation to the economy that will not undermine the inflation outlook and has therefore decided to reduce the repurchase rate by 50 basis points to 5.0% from Friday 20 July 2012," Marcus said.
"While it is recognised that such a move on its own will not overcome the challenges facing the economy, it is felt that it can help alleviate some of the pressures faced by some sectors, and will act appropriately in line with its mandate."
"There is no easy decision in the MPC and this one was a
particularly robust discussion. In the end it was a unanimous
decision that this was the right thing to do. Given the
conditions that are prevailing and our concerns going forward we
thought it important to be proactive," she said.