South Africa’s Fourth Central Bank Rate Cut since January

May 21, 2020

The South African Reserve Bank repo rate was lowered 50 basis points to 3.75% following a 3-2 vote, with dissents favoring only a 25-basis point reduction. Today’s easing brings to 275 bps the total rate reduction since mid-January. In a released statement, the Monetary Policy Committee anticipates two cuts of 25 basis points each in the second half of 2020, and it has revised greater the projected GDP contraction this year by a percentage point to 7%. It will take the two following years to reverse this slide. Although the rand has fallen some 23% since January, officials foresee downside inflation risks around a forecast that anticipates core consumer prices rising 3.5% this year, 3.8% next year, and 4.1% in 2022.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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