Slight reprieve for consumers

This takes repo rate to 7.75%, prime lending rate to 11.25%.

- Ina Opperman

The Monetary Policy Committee (MPC) of the South African Reserve Bank (Sarb) yesterday cut the repo rate by only 25 basis points, despite economists calling for a cut of 50 basis points. After Statistics SA announced the inflation rate for October decreased by a full percent in October from September, economists said there are now no inflation expectations to justify not cutting the repo rate by 50 basis points. Lesetja Kganyago, Sarb governor announced the MPC"s decision yesterday. The 25 basis points cut brings the repo rate to 7.75% and prime lending rate to 11.25%. He said the global macroeconomic context has become more challenging since the previous MPC meeting in September, when the repo rate was also cut by 25 basis points. "The dollar has appreciated against most currencies, including the rand," said Kganyago. "Longer-term interest rates have increased in the US and across the globe. Short-term rate expectations have likewise shifted up." In general, monetary policy in major economies remains restrictive and headline inflation has slowed, he added. "While this has provided some room for major central banks to ease rates further over the past two months, new inflation pressures and heightened uncertainty suggest dimin