SARB cuts rates by 100 basis points to record low
The South African Reserve Bank has cut the repo rate by 100 basis points which leaves the repo rate at 4.25 per cent per annum.
Tue, 14 Apr 2020 15:20:01 GMT
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AI Generated Summary
- SARB reduces interest rates by 100 basis points to a record low of 4.25% to counter the negative impact of extended lockdowns and slow economic recovery
- Inflation is expected to remain below target levels in 2020 and 2021 despite ongoing challenges regarding demand, currency, and oil shocks
- The central bank focuses on improving financial conditions, enhancing liquidity, and facilitating lending to households and businesses to mitigate the economic consequences of the pandemic
In an unexpected move, the South African Reserve Bank (SARB) has slashed interest rates by 100 basis points to reach a record low. Governor Lesetja Kganyago addressed the nation today, highlighting the need for unprecedented measures in response to the current economic challenges. The decision comes as a response to the extended lockdowns and slower recovery, which pose risks to inflation and demand. Despite these challenges, inflation is projected to remain below the target midpoint in 2020 and 2021. The Monetary Policy Committee (MPC) made a unanimous decision to reduce the repo rate to 4.25% with immediate effect from April 15, 2020. This bold move is aimed at supporting the economy through improved financial conditions and enhancing the resilience of households and businesses amidst the COVID-19 crisis. In addition to rate cuts, the SARB is ensuring liquidity in financial markets and relaxing capital requirements to encourage lending by financial institutions. While these measures provide short-term relief, addressing long-term growth and fiscal risks will require implementing structural reforms to boost investment opportunities and job creation. Governor Kganyago emphasized the importance of comprehensive economic policies to further bolster the effectiveness of monetary stimulus and lending initiatives.
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