Lowest repo rate since January 23 brings some relief for consumers with debt payments
The latest 25 basis point cut means commercial banks will borrow from a rate of 7.25% from the central bank, while consumers will borrow from a rate of 10.75% from commercial banks.
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JOHANNESBURG - Consumers are in for some reprieve on their debt repayments as the benchmark repo rate drops to its lowest since January 2023.
This after a majority of the SA Reserve Bank’s monetary policy committee (MPC) voted in favour of a cut when the May meeting wrapped up on Thursday.
The latest 25 basis point cut means commercial banks will borrow from a rate of 7.25% from the central bank, while consumers will borrow from a rate of 10.75% from commercial banks.
The 25 basis point cut was widely anticipated by economists, citing the current 2.8% inflation rate, which is below the reserve bank’s target band of 3% to 6%.
Governor Lesetja Kganyago said that the central bank had revised down its inflation forecasts, reflecting the lower starting point, as well as a stronger exchange rate assumption and lower world oil prices.
"These factors offset pressure on fuel costs from the higher fuel levy announced in the budget. In addition, our previous forecast included VAT increases, which have since been cancelled."
While the inflation outlook appears benign, Kganyago said that there were still upside risks.
This included a global slowdown, triggered by escalating trade tensions, where the rand depreciated sharply.