EDITORIAL: Rate cut: any little bit helps
It was that much lower inflation outlook that prompted the cut in rates
We have earned our credibility and will protect it — this was Reserve Bank governor Lesetja Kganyago’s emphatic response when asked whether the Bank had been under pressure or was concerned about its credibility following its unexpected decision to cut interest rates. And if anything demonstrated how solid is the credibility that the Bank has built under Kganyago and predecessors Gill Marcus and Tito Mboweni, it was the orderly way in which the rand exchange rate responded to Thursday’s rate cut. The rand weakened to above R13 to the dollar on news of the decision – which was entirely to be expected. The market had been taken by surprise. The political context was one in which the public protector had, bizarrely, called for the Bank’s price stability mandate to be replaced with a welfare-related mandate and in which there were renewed calls for the Bank to be nationalised. There were bound to be concerns in the market about what prompted the cut. However, the rand rapidly rebounded ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.