Lower repo rate is bad for markets for now, says Chris Harmse

THE Monetary Policy Committee (MPC), during its press conference last Thursday on its latest repo rate decision, decided to lower the repo rate with 25 basis points from 7.00% to 6.75% with immediate effect.

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SOUTH African Reserve Bank Governor, Lesetja Kganyago announced on Thursday that the repurchase rate will decrease by 25 basis points.

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In return banks lowered their prime rate by 0.25% to 10.25%. This is the second cut for 2025, bringing the repo rate down by 50 basis points in total.

Before the press conference there was a 50/50 division between economists and analysts on the possibility of a lower repo rate. The President of the Reserve Bank on Thursday, Lesetja Kganyago said that inflation expectations, point towards moving towards the 3% objective.

The average inflation rate for the year to date is 3.15%, this is despite the increase in October to 3.6% from 3.4% in September, which was announced last Wednesday. The governor sums the decision to lower the rate as follows, “Core goods prices are benefitting from exchange rate strength.