Reserve Bank surprises by cutting interest rates
Few had expected the Bank to cut rates just yet, even though inflation is easing and economic growth is stalling
The Reserve Bank surprised markets with an interest rate cut on Thursday. While most economists have been expecting the bank to move towards a cut, it was not expected to come quite so soon. The Bank cut the repo rate to 6.75% from 7%. The rand did not react dramatically to the news, oscillating near the R13/$ mark. It fell back through R13, rebounded to about R12.96 and then dropped again to R12.99/$ by about 3.40pm. Only three of the 23 economists surveyed by Bloomberg predicted the Bank would cut the repo rate, while the Trading Economics consensus was for it to remain at 7%. The outlook for economic growth, meanwhile, has worsened. SA entered a technical recession in the first quarter of this year — a development that had not been expected. The governor said: “At the same time, domestic growth prospects have deteriorated further following the surprise Gross domestic product (GDP) contraction in the first quarter of 2017. “The economy has now recorded two successive quarters of n...
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