Interest rate cut by 0.25 percentage points by Reserve Bank

SOUTH African Reserve Bank Governor, Lesetja Kganyago announced yesterday that the Monetary Policy Committee had voted to cut the interest rate by 0.25 percentage points on the back of lower inflation and a stronger rand.

- NICOLA MAWSON

At the same time, Kganyago, said that the inflation target should be dropped to 3%, rather than the 3% to 6% range as was currently the situation.

The Governor made this announcement as he revised the bank’s gross domestic product expectation lower to just 1.2% this year, lower than Finance Minister Enoch Godongwana’ anticipated 1.4%, which he made earlier this month during the third iteration of the National Budget.

The cut in the interest rate drops the prime lending rate to consumer to 10.75%, depending on risk.