JOHANNESBURG - South African Reserve Bank Governor Lesetja Kganyago announced today the bank's latest decision on interest rates following the three-day meeting of the monetary policy committee which he chairs.
The MPC unanimously decided to reduce the repurchase rate by 25 basis points to 6.5% per annum. pic.twitter.com/ygpuBHmu1y Kganyago said during his statement, " GDP contracted by 3.2% in the first quarter, reflecting weakness in most sectors of the economy. The sharp quarterly decline was primarily caused by electricity shortages and strikes that fed into broader weaknesses in investment, household consumption and employment growth.
Inflation rose to 4.5 percent in May from 4.4 percent in the prior month, but still in the mid-point of the Sarb’s target range of 3 to 6 percent. Bank of America Merrill Lynch said its researchers had pencilled in the 25 basis point cut to be followed by two cuts in September and January. Yesterday, retail sales in South Africa increased 2.2percent year-on-year in May following an upswing of 2.7percent the previous month, raising hopes that the much-anticipated expected interest cut today would provide a further boost to embattled households’ bottom lines.