In the wake of the national disaster that South Africa finds itself in because of the coronavirus outbreak in the country and globally, the Monetary Policy Committee (MPC) of the South African Reserve Bank decided (SARB) to cut the repo rate by 100 basis points.
This takes the repo rate to 4.25 percent per annum.
The May 2020 meeting of the MPC was been moved earlier and took place on Tuesday.
SARB governor Lesetja Kganyago announced in March earlier this year, at the start of South Africa's response to the pandemic that the Reserve Bank would cut interest rates by 100 basis points.
This took the repo rate to 5.25 percent which took effect from 20 March 2020, and saw the prime lending rate drop to 8.75 percent.
The latest cuts means that the prime lending rate will now drop to 7.75 percent.
Kganyago said at his previous announcement, "The implied path of policy rates over the forecast period generated by the Quarterly Projection Model indicated three repo rate cuts of 25 basis points each in the second and fourth quarter of 2020, as well as in the third quarter of 2021. Monetary policy can ease financial conditions and improve the resilience of households and firms to the short-term economic implications of Covid-19. Our decision and its magnitude seeks to do this in the near term."
"Monetary policy however cannot on its own improve the potential growth rate of the economy or reduce fiscal risks. Current economic conditions underscore the importance of implementing prudent macroeconomic policies and structural reforms that lower costs generally, and increase investment opportunities, potential growth and job creation," Kanyago added.
Kganyago will hold a media briefing at 11:30 to explain details on the latest interest rate cut. Watch it below:
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