Rate cut: is it enough?

Kganyago’s announcement is the first Sarb cut since the Covid cutting cycle ended in 2020.

- Liesl Peyper

EFFECT: PRIME INTEREST RATE OF COMMERCIAL BANKS FALLS TO 11.5%.

The South African Reserve Bank (Sarb) cut its repurchase rate (repo rate) by 25 basis points to 8% yesterday, the first cut since the Covid global economic fallout four-and-a-half years ago.

Central bank governor Lesetja Kganyago confirmed the decision following the Sarb's September Monetary Policy Committee (MPC) meeting in Pretoria.

The widely expected move aligns with expectations from most economists and market watchers.

It is the first Sarb rate cut since the Covid cutting cycle ended in July 2020.

Just a day before the MPC's latest decision, Statistics South Africa said the country's annual inflation rate fell below the midpoint of the Sarb's target range of between 3% and 6% for the first time in more than three years.