Reserve Bank Unexpectedly Lowers Repo Rate

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has voted to lower the repo rate from 6.5% to 6.25%.

The unexpected 25 basis points cut is expected to provide stimulus to the sluggish economy as the central bank lowered its inflation forecasts significantly.

“While the committee would like to see the inflation expectations anchored closer to the midpoint of the inflation target range on a sustained basis, the lower inflation forecast and improved risk profile opens some space to provide further policy accommodation to the economy,” said SARB Governor Lesetja Kganyago.

South Africa’s public finances are under severe strain after repeated bailouts to ailing state firms like power utility Eskom and a steep run-up in public debt.

The decision to cut the rate