Interest rate cut hailed as step in right direction
The Reserve Bank cut the benchmark repo rate to 7.25 percent from 7.5% in the May meeting on Thursday.
FILE: South African Reserve Bank (SARB) Governor Lesetja Kganyago. Picture: Karabo Tebele/702
JOHANNESBURG - Some economists and political parties have hailed the latest repo rate cut as a step in the right direction as consumers look for reprieve and policy-makers set their sights on economic growth.
The Reserve Bank cut the benchmark repo rate to 7.25 percent from 7.5% in the May meeting on Thursday.
The 25 basis point comes after inflation came in at 2.8% in April, which is below the central bank's target range of 3% to 6%, creating room for a rate cut.
READ: SARB MPC cuts repo rate by 25 basis points to 7.25%
Despite some improved domestic conditions, global uncertainty remains, adding to risks.
Economist at Sanlam Investments, Patrick Buthelezi, said the central bank’s Monetary Policy Committee may be cautious going forward.
"There is still a scope for at least another 25-basis point cut under the current inflation targeting regime. However, the Reserve Bank presented an alternative scenario of a 3% inflation target. In this scenario, the economy grows at a slightly lower pace this year but in the medium to longer term, the economy grows much faster."