• News
  • Sport
  • TV
  • Radio
  • Education
  • TV Licences
  • Contact Us
No Result
View All Result
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • SCI-TECH
  • LIFESTYLE
  • FEATURES
  • OPINION
Home Business

Economists welcome repo rate cut

21 May 2020, 6:51 PM  |
Glorious Sefako-Musi Glorious Sefako-Musi |  @SABCNews
A person counts South African rands

A person counts South African rands

Image: Reuters

A person counts South African rands

In what is likely to be a piece of good news for indebted consumers this Thursday, the Reserve Bank reduced the repo rate by 50 basis points to 3.75%, meaning the prime lending rate by banks is now 7.25%. Indebted consumers will pay less on their debt instalments.

The Central Banks says the easing of the lockdown regulations will help support growth in the near term. It, however, says getting the economy back to pre-pandemic activity levels will take time.

Economists have welcomed the repo rate cut by 50 basis points.

The Monetary Policy Committee has cut the repurchase rate by 50 basis points, bringing it to 3.75% per annum, with effect from 22 May 2020. #MPCStatement #MayMPC pic.twitter.com/2Rgz72SJkE

— SA Reserve Bank (@SAReserveBank) May 21, 2020

Briefing the media, Reserve Bank Governor Lesetja Kganyago said that the central bank expected South Africa’s GDP to shrink by 7% in 2020. In April, the bank had predicted a 6.1% fall in GDP.

The move will bring further relief to South Africa’s battered economy, most of which is still under lockdown.

Director at Merchant Afrika Lavan Gopaul says the markets were anticipating a further reduction of the interest rate.

“While the markets were anticipating a further reduction in the interest rate, they had expected a much larger increase today. You saw the markets build on this price and keeping the rand trading at a much weaker level. Whilst the market digested that we might see a much smaller cut, you saw an immediate dash for currency and there was demand for the rand, dipping below that R18 to a dollar level. So all in all, we are seeing a stronger currency because the interest rate didn’t drop as much as the markets expected.”

Markets’ reactions to the repo rate cut with Lavan Gopaul: 

Economist Miyelani Mkhabela says that he expected the bank to cut the repo rate by 100 basis points.

“The 50 basis points is a measure that can be good for consumers, but you will have expected them to cut the repo rate by 100 basis points. That would have created more ease for the consumers, whether it would be businesses or individuals because the economy is deeply affected. When at the same time you look at inflation, you can realise that it is at 4.1% and looking at the target of 3.5%, it really needs again 100 basis points.”

He says that consumers will feel the 50 basis points difference in the repayment of loans and bonds.

“Consumers will start to see on their bonds or their loans and vehicle finances … they will see a difference in their repayment models and at the same time, we will look at a better relief in terms of income. So, if you were paying a higher bond, you will start to have some figures that will be part of your possible income.”

Economist Miyelani Mkhabela discusses the Reserve Bank’s decision:

The central bank says COVID-19 has presented challenges in forecasting domestic economic activity. It however says job losses are expected to be widespread, as even with eased lockdown regulations, trade and investments will be hugely impacted.

Economist at Nedbank Isaac Matshego explains:

Consumers with debt will see a reduction in the amount of money they pay on their debt.

 

Share article
Tags: Reserve BankInterest RateRepo rate
Previous Post

Investigation under way after 7 men killed in south of Durban

Next Post

COVID-19 data shows disproportionate burden of illness, death among US black, Hispanic groups

Related Posts

African National Congress president Cyril Ramaphosa

ANC’s proposal for national state of disaster amid energy crisis elicits mixed reactions

31 January 2023, 9:50 PM
Small toy figures are seen in front of WeChat logo in this illustration picture taken March 15, 2021.

China leads the world in counterfeit, pirated products: US report

31 January 2023, 9:35 PM
The dollar index was last little changed on the day against a basket of currencies at 102.24.

Dollar pares gains on falling US labour costs, before Fed decision

31 January 2023, 7:02 PM
Miners work deep underground at Sibanye Gold's Masimthembe shaft in Westonaria, South Africa, April 3, 2017.

South Africa reports safest year in mining, government urges more

31 January 2023, 6:04 PM
A pump is seen in a car at a Shell petrol station

Fuel prices set to increase by midnight

31 January 2023, 4:31 PM
A house without power.

Eskom implements Stage 5 and 6 rolling blackouts

31 January 2023, 12:01 PM
Next Post
A recent analysis found that African Americans, Hispanics and other minority populations are being the hardest hit.

COVID-19 data shows disproportionate burden of illness, death among US black, Hispanic groups

Most Viewed

  • 24hrs
  • Week
  • Month
  • Gas leak shut, isolated in Pretoria North
  • King of Bacardi music ‘Vusi Ma R5’ killed in Soshanguve
  • Bapedi kingdom commemorates Kgosi Mampuru II, still hoping to find his remains
  • Limpopo man arrested after discovery of his wife’s body in water-filled pit toilet
  • EFF cuts ties with IFP in KwaZulu-Natal
  • Parts of the Northern Cape to be exempted from rolling blackouts
  • VIDEO | St Benedict College’s Matric learner gets 11 distinctions
  • Limpopo matriculant from child-headed household attains diploma pass
  • Female circumcision practice thriving in Eastern Cape
  • Premier denies claims that KZN government spent millions on Mampintsha’s funeral
  • Legitimacy of shooting video in Malema trial under spotlight
  • Energy crisis could be declared a national disaster
  • Eskom implements Stage 5 and 6 rolling blackouts
  • ANC implores BRICS countries for help amid rolling blackouts
  • Registration at Unisa closes on Friday, but management says no need to panic

LATEST

  • World

Calls for police reform ring out across United States in aftermath of Tyre Nichols’ death


African National Congress president Cyril Ramaphosa
  • Business

ANC’s proposal for national state of disaster amid energy crisis elicits mixed reactions


A NSFAS employee assists a student.
  • South Africa

900 000 students to receive NSFAS bursaries in 2023: Nzimande


Small toy figures are seen in front of WeChat logo in this illustration picture taken March 15, 2021.
  • Business

China leads the world in counterfeit, pirated products: US report


A soccer player on the field.
  • Sport
  • Soccer

Orlando Pirates sign Makhehleni Makhaula on last day of transfer window


Close up picture of Cape Town High Court Judge President Hlophe
  • South Africa

Hlophe misses Supreme Court’s extended January deadline


Weather

  • About the SABC
  • Contact Us
  • Jobs
  • Advertise
  • Disclaimer
  • Site Map

SABC © 2023

No Result
View All Result
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • SCI-TECH
  • LIFESTYLE
  • FEATURES
  • OPINION

© 2022

Previous Investigation under way after 7 men killed in south of Durban
Next COVID-19 data shows disproportionate burden of illness, death among US black, Hispanic groups