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Johannesburg - The South African Reserve Bank's monetary policy
committee cut the key repo rate by half a percentage point on Thursday.
The new repo rate is 6%, with the prime lending rate to change to 9.5%
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.
The decision to cut rates had been expected.
Most
economists have argued for a rate cut to boost the economy in the wake
of a favourable inflation outlook, as well as slower gross domestic
product growth figures and factory data.
The July rate of change
in the consumer price index (CPI) came in at 3.7% from 4.2% in June. On
Wednesday, Statistics SA reported annual manufacturing production
growth of 7.5%, well down on June's growth rate of 9.3%.
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."
- Fin24.com