The South African Reserve Bank (SARB) has reduced interest rates, bringing some savings to car owners in South Africa\u2014and more are likely to follow.<\/p>\n\n\n\n
Yesterday, September 19, the SARB’s Monetary Policy Committee (MPC) unanimously decided to drop the repo rate by 25 basis points from its 15-year high of 8.25% to 8.0% – in line with expectations.<\/p>\n\n\n\n
The prime interest rate thus also dropped from 11.75% to 11.50%. <\/p>\n\n\n\n
Reserve Bank governor Lesetja Kganyago said that the MPC reached a consensus of a 25 basis point cut, stating that a less restrictive stance was consistent with sustainably lower inflation over the medium term.<\/p>\n\n\n\n
The latest inflation print for South Africa in August was 4.4%, a three-year low, and below the SARB’s target midpoint of 4.5%.<\/p>\n\n\n\n
The rate cut follows similar moves from other international central banks. The US FED cut interest rates by 50 basis points a day before the MPC’s decision.<\/p>\n\n\n\n
South African assets have performed relatively well in recent months. The rand has strengthened more than many of its emerging market peers, while long-term yields have moderated and spreads over US rates have narrowed.<\/p>\n\n\n\n