The South African Reserve Bank reduced its benchmark repo rate by 25 basis points to 8.00% on 19 September 2024, its first cut since July 2020. The Monetary Policy Committee's decision was unanimous.
The move brings the repo rate down from 8.25%, where it had stood since the previous tightening cycle concluded. The prime lending rate offered by commercial banks — which is conventionally set 3.5 percentage points above the repo rate — will fall accordingly to 11.50%.
INFLATION FALLS BELOW MID-POINT TARGET
The latest consumer price inflation data showed headline CPI declining to 4.4% in August 2024. That reading placed inflation below the 4.5% mid-point of the SARB's 3%–6% target band.
FIRST REDUCTION SINCE JULY 2020
The September 2024 cut is the first downward move in the repo rate since July 2020, when the SARB cut rates in response to the economic contraction caused by the Covid-19 pandemic. The post-pandemic tightening cycle, which began in November 2021, ultimately brought the repo rate from 3.50% to 8.25% through a series of increases.
The SARB said it would continue to assess incoming data to determine the appropriate pace of any further adjustments.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn