{"id":389425,"date":"2020-04-14T11:11:39","date_gmt":"2020-04-14T09:11:39","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=389425"},"modified":"2020-04-14T13:33:43","modified_gmt":"2020-04-14T11:33:43","slug":"reserve-bank-announces-surprise-rate-cut-of-another-100-basis-points","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/389425\/reserve-bank-announces-surprise-rate-cut-of-another-100-basis-points\/","title":{"rendered":"Reserve Bank announces surprise rate cut of another 100 basis points"},"content":{"rendered":"<p>The South African Reserve Bank&#8217;s Monetary Policy Committee has cut the country&#8217;s benchmark interest rate by another 100 basis points (one percentage point), taking the repo rate to 4.25% per annum.<\/p>\n<p>The MPC meeting was initially scheduled to take place in May 2020, but was brought forward to Tuesday, the central bank said.<\/p>\n<p>This move follows a 100 basis point cut on 19 March 2020, after the global coronavirus epidemic was declared a state of disaster in the country.<\/p>\n<p>At the time, Reserve Bank governor Lesetja Kganyago said that low inflation has created space for monetary policy to respond to deteriorating economic conditions.<\/p>\n<p>The move is likely to be welcomed by consumers and businesses who are facing immense financial pressure due to the ongoing lockdown.<\/p>\n<p>Industries such as the property sector, are also likely to benefit as it will make it easier for South Africans to qualify for and pay off loans.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">The Monetary Policy Committee (MPC) of the <a href=\"https:\/\/twitter.com\/SAReserveBank?ref_src=twsrc%5Etfw\">@SAReserveBank<\/a> has decided to cut the repo rate by 100 basis points. This takes the repo rate to 4.25% per annum.<\/p>\n<p>\u2014 SA Reserve Bank (@SAReserveBank) <a href=\"https:\/\/twitter.com\/SAReserveBank\/status\/1249981605491458048?ref_src=twsrc%5Etfw\">April 14, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In a briefing regarding the cut, Reserve Bank governor Lesetja Kganyago said it comes against the backdrop of global uncertainty around the coronavirus pandemic, and weak local economic fundamentals.<\/p>\n<p>It was a unanimous decision, he said.<\/p>\n<p>The global Covid-19 pandemic has introduced unprecedented levels of uncertainty to global markets, which have impacted every sector.<\/p>\n<p>&#8220;The uncertainties of the crisis have led to extremely high volatility in financial asset prices, with sharp and deep market sell-offs followed by a partial recovery,&#8221; the governor said.<\/p>\n<p>&#8220;At this stage, the sustainability of that recovery remains uncertain, and global markets remain in risk-off mode. This has implications for emerging markets and South Africa in particular, as investor appetite for rand-denominated equities and bonds is expected to remain weak.&#8221;<\/p>\n<p>In South Africa this is being felt across both the supply and demand side of industries, with businesses remaining shut during the now-35 day lockdown, and consumers staying home, spending less.<\/p>\n<p>&#8220;The Covid-19 outbreak will have a major health and social impact, and forecasting domestic economic activity presents unprecedented uncertainty,&#8221; he said.<\/p>\n<p>Reflecting this, the Reserve Bank now expects GDP in 2020 to contract by 6.1%, rising to growth of 2.1% in 2021 and 2.7% in 2022.<\/p>\n<p>Job losses as a result of the lockdown are expected to continue, hitting the informal sector particularly hard, Kganyago said.<\/p>\n<p>The downgrade by Moody&#8217;s also factored in, though the governor noted that the lockdown and prolonged recovery are having a bigger impact &#8211; though inflation remains contained.<\/p>\n<p>He added that the forecasting model shows room for five 25 basis-point cuts ahead, extending to the first quarter of 2021.<\/p>\n<p>The full statement can e read below:<\/p>\n<p style=\"margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;\"><a style=\"text-decoration: underline;\" title=\"View May 2020 MPC Statement on Scribd\" href=\"https:\/\/www.scribd.com\/document\/456362295\/May-2020-MPC-Statement#from_embed\">May 2020 MPC Statement<\/a> by <a style=\"text-decoration: underline;\" title=\"View BusinessTech's profile on Scribd\" href=\"https:\/\/www.scribd.com\/user\/413742166\/BusinessTech#from_embed\">BusinessTech<\/a> on Scribd<\/p>\n<p><iframe loading=\"lazy\" id=\"doc_25728\" class=\"scribd_iframe_embed\" title=\"May 2020 MPC Statement\" src=\"https:\/\/www.scribd.com\/embeds\/456362295\/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-rkqYauHsQUda8OLXksd7\" width=\"640\" height=\"853\" frameborder=\"0\" scrolling=\"no\" data-auto-height=\"false\" data-aspect-ratio=\"0.7080062794348508\"><\/iframe><\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/banking\/383167\/sa-reserve-bank-cuts-repo-rate-by-100-basis-points\/\" rel=\"bookmark\">SA Reserve Bank cuts repo rate by 100 basis points<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The South African Reserve Bank&#8217;s Monetary Policy Committee has cut the country&#8217;s benchmark interest rate by another 100 basis points (one percentage point), taking the repo rate to 4.25% per annum.<\/p>\n","protected":false},"author":10,"featured_media":281403,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,4043],"class_list":["post-389425","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/389425","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=389425"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/389425\/revisions"}],"predecessor-version":[{"id":389533,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/389425\/revisions\/389533"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/281403"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=389425"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=389425"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=389425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}