CB cuts rates to pre-empt any fallout from trade uncertainty

OVERNIGHT POLICY RATE TRIMMED 25BPS TO 7.75%, FIRST TIME SINCE NOVEMBER LAST YEAR DELIVERS SURPRISE RATE CUT AT THE THIRD MONETARY POLICY MEETING FOR THE YEAR DECISION APPEARS TO BE TAKEN AS A PRE-EMPTIVE ACTION AGAINST POTENTIAL FALLOUT FROM GLOBAL UNCERTAINTIES

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The Central Bank delivered a surprise rate cut yesterday at its third monetary policy meeting for the year, reducing its key policy rate, the Overnight Policy Rate (OPR), by 25 basis points to 7.75 percent.

This was the first rate cut since last November, when the Central Bank introduced the single policy rate, the OPR, setting it at 8.00 percent, effectively reducing the policy rate by 50 basis points.

Leading up to yesterday's decision, the consensus expectation was that the Central Bank would hold the key policy rate at its existing level, as inflation is moving in the desired direction, credit to the private sector is growing at a satisfactory pace amid declining interest rates, and the external sector remains robust, with tourism and remittances bringing in strong inflows.