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Johannesburg - South African banks have reduced their lending rates by 50 basis points, following the announcement by the Reserve Bank that is will reduce the key repo rate by 50 basis points to 6.0%.
Standard Bank Group [JSE:SBK] said it would be decreasing its prime and home loan base lending rates from 10% to 9.50%, effective from Friday. These rate changes apply to new and existing clients.
This was followed by Absa Group [JSE:ASA], First National Bank and Nedbank Group [JSE:NED] which also announced a 50 basis points cut in lending rates.
"The cut in interest rates is a welcome development and will provide further relief to many consumers still struggling with debt repayments against the background of continued tight labour market conditions in the first half of the year," said Absa.
Earlier on Thursday, the Reserve Bank cut the key repo rate to 6%.
The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.
Bank governor Gill Marcus said the MPC views the decision to be consistent with the continued attainment of the inflation target, having given due regard to the risks in the outlook.
"The scope for further downward movement is seen to be limited, but this will be assessed on an ongoing basis. Our approach remains forward-looking and is informed by close examination of the data and future developments," she said.
Reacting to the MPC's decision, chairperson of the National Consumer Forum said: "I think this is something consumers are going to welcome as they've also recently had a drop in the price of petrol. They should use this opportunity to pay off their debts."
Efficient Financial Holdings economist Freddie Mitchell said: "The cut was not surprising at all given the data out of the second quarter. Like the Governor said, the scope for interest rate cuts is getting narrower, I don't thing we'll see another cut this year."
Standard Bank Group [JSE:SBK] said it would be decreasing its prime and home loan base lending rates from 10% to 9.50%, effective from Friday. These rate changes apply to new and existing clients.
This was followed by Absa Group [JSE:ASA], First National Bank and Nedbank Group [JSE:NED] which also announced a 50 basis points cut in lending rates.
"The cut in interest rates is a welcome development and will provide further relief to many consumers still struggling with debt repayments against the background of continued tight labour market conditions in the first half of the year," said Absa.
Earlier on Thursday, the Reserve Bank cut the key repo rate to 6%.
The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.
Bank governor Gill Marcus said the MPC views the decision to be consistent with the continued attainment of the inflation target, having given due regard to the risks in the outlook.
"The scope for further downward movement is seen to be limited, but this will be assessed on an ongoing basis. Our approach remains forward-looking and is informed by close examination of the data and future developments," she said.
Reacting to the MPC's decision, chairperson of the National Consumer Forum said: "I think this is something consumers are going to welcome as they've also recently had a drop in the price of petrol. They should use this opportunity to pay off their debts."
Efficient Financial Holdings economist Freddie Mitchell said: "The cut was not surprising at all given the data out of the second quarter. Like the Governor said, the scope for interest rate cuts is getting narrower, I don't thing we'll see another cut this year."
