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You are at:Home»Uncategorized»Repo rate cut good news for SA economy
Uncategorized

Repo rate cut good news for SA economy

Busisiwe HohoBy Busisiwe HohoSeptember 13, 2010No Comments2 Mins Read
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The South African Reserve Bank (SARB) Governor, Gill Marcus, has announced a repo rate cut of 0.5%. This means good news for consumers who can look forward to reduced rates on their bond and loan repayments, and all those struggling under debt may find relief in the reduced cost of credit as all interest rates will go down.

The South African Reserve Bank (SARB) Governor, Gill Marcus, has announced a repo rate cut of 0.5%. This means good news for consumers who can look forward to reduced rates on their bond and loan repayments, and all those struggling under debt may find relief in the reduced cost of credit as all interest rates will go down.


While pensioners may find the reduced income from savings harder to absorb, the rapid decline in inflation should be filtering through the retail market, bringing with it falling consumer goods prices.

The outlook for the South African economy going forward seems positive from the SARB as inflation projections for the future look to stay within the healthy limits of 5.2% by 2012.

Recent measures to curb rapidly rising inflation in 2009 have been effective and marked a turnaround in South Africa’s inflationary pressures.

A healthy rand and strong foreign demand for South African markets as an investment opportunity have strengthened the overall position of South Africa’s economy from the second quarter this year.

Gill Marcus stated that “Domestic economic growth declined in the second quarter of 2010, to a quarter-onquarter annualised rate of 3.2%, following a growth rate of 4.6% in the previous quarter.”

She points out that the largest contributing factor to our slow growth is due mainly to “the 20.8% contraction in the mining sector in this quarter”.

Consumers can expect an easier time over the coming months as a strong rand combined with foreign investment work to insulate the local economy from the workings of the global crisis.

However SARB states that “The scope for further downward movement is seen to be limited,” so we should expect this rate cut to be the last we see for a while if the current economic climate holds.

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Busisiwe Hoho

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