South Africa’s repo rate has been slashed by 50 basis points to 3.75 percent starting on Friday, South African Reserve Bank governor Lesetja Kganyago has announced.The cut is the third since the advent of coronavirus pandemic in the country in March when the MPC cut the repo rate by 100 basis – with a second 100 basis points slash following in April.
Kganyago said the decision to slash the repurchase rate was reached at the Monetary Policy Committee (MPC) meeting in Pretoria on Thursday as part of its efforts to assist the troubled economy in light of the current coronavirus pandemic lockdown.
“Against this backdrop, the five-member MPC decided to cut the repo rate by 50 basis points, taking it to 3.75 percent per annum, with effect from 22 May 2020.
“Three members preferred a cut of 50 basis points and two preferred a cut of 25 basis points,” the governor said.
According to the bank, it was expecting investment, exports and imports to decline sharply as the lockdown eased slowly.
Slashing the repo rate was also in recognition of the massive job losses in the country, it said.
“Easing of the lockdown will support growth in the near term and some high-frequency activity indicators show a pickup in spending from extremely low levels.
“However, getting back to pre-pandemic activity levels will take time. GDP is expected to grow by 3.8 percent in 2021 and by 2.9 percent in 2022,” he said.
The MPC meets again July.