SA Reserve Bank
There has been a positive reaction to the 25 basis points cut in the repo rate, the first cut in the prime lending rate since November 2021.
DA leader, John Steenhuisen, said Thursday’s announcement by the Reserve Bank governor, Lesetja Kganyago, was a positive step towards alleviating the pressure on South African households and businesses, and reflects the improving economic conditions in the country.
"Since the inception of the GNU, we have seen a definite increase in confidence in Government, and a sense of hope has been restored in all South Africans.
"This is evident in the strengthening of the rand, together with lower fuel prices and inflation finally falling below the SARB's target of 4.5%," Steenhuisen said.
Reserve Bank governor, Lesetja Kganyago, said the prime lending rate will drop to 8% on Friday.
"In discussing this stance, MPC members considered an unchanged stance, a 25 basis points cut, and a 50 basis points cut.
“The MPC ultimately reached consensus on a 25 basis points, agreeing that a less restrictive stance was consistent with sustainably lower inflation over the medium term," Kganyago said.
He said the forecast "sees" rates moving towards "neutral" next year, stabilising slightly above 7%.
The MPC decided to reduce the policy rate by 25 basis points, to 8% per annum, with effect from 20 September. The decision was unanimous. pic.twitter.com/TYLgQ7tAYo
— SA Reserve Bank (@SAReserveBank) September 19, 2024
Build One South Africa said leaving interest rates unchanged again would have kept tight the financial noose around the necks of South African households.
“South Africans need assistance in lessening the burden of exorbitant cost of living and high levels of personal and household debt.
“On average, citizens are using 65% of their net income to service debt. 76% of South Africans regularly run out of money before the end of the month, and more than half run out halfway through the month,” said BOSA national spokesperson, Roger Solomons.
The news was also welcomed by the industry, with Betterbond's head of sales, Bradd Bendall, saying consumers can breathe a sigh of relief.
"We hope that this positivity will be reflected in the housing market, with slightly lower interest rates making it possible for more buyers to invest in property.
"BetterBond has already seen a 6.5% quarter-on-quarter pick-up in bond applications, and we expect this trend to continue over the next few months if the prime lending rate continues to drop as economists expect," he said.
