The Monetary Policy Committee has cut the repurchase rate by a further 50 basis points, after a two consecutive cuts of 100 basis points earlier this year. HelloThando reports.
continues to affect the country’s economy. This takes the repo rate to a 50-year low, from 4.25% to 3.75%.
The Reserve Bank has forecast that the economy could contract 7% in 2020, revised from the 6.1% decline it had forecast in April. said even if the lockdown is eased in the coming months and more economic activity resumes, the Bank expects gross domestic product to grow only slightly in the next couple of years, by 3.8% in 2021 and 2.9% in 2022.
Kganyago said the uncertainty of the pandemic presents challenges for the Bank in terms of accurately collecting the country’s economic statistics. Economic data points, however, indicate a worsening environment. For example, the rand has depreciated 22.9% against the dollar since January, and 0.7% since the April meeting of the MPC.
To cushion the economy against the economic fallout of the coronavirus, the Reserve Bank has introduced measures to increase liquidity in the market, including buying government bonds in the secondary market. Overall, the Bank’s interventions that far are expected to inject R300-billion into the economy.
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