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Repo Rate Cut Again

The South African Reserve Bank this week announced another cut to the Repo Rate (the rate they charge the banks to loan money). This is the latest in a sting of cuts over the last few weeks.

The Repo Rate was cut from 4.25% (already a record low) down to 3.75% (so down 50 base points).

 

REPO RATE: 3.75%

This means the rate has now dropped by 2.5% this year in only the first half of 2020. The rate cuts have been made in reaction to economic changes happening because of the global Covid-19 Pandemic and international oil prices as well as Rand vs Dollar rates.

Locally, the economy is heading for a massive fall off with projected figures of “official” unemployment heading to 50%. That will mean 7 Million unemployed people. GDP is expected to hardly grow at all under such circumstances.

So, the Monetary Policy Committee had all the reasons in the world to once again lower the rate. This in turn means that Prime (the rate that the banks link their loans to) also drops to 7.25%. This means people with existing debts with the banks that are linked to this rate will now be paying less for their credit.