Repo rate slashed by 100 basis points

Thursday, May 28, 2009

Pretoria - Cash strapped consumers have been given another reprieve - the Reserve Bank's Monetary Policy Committee (MPC) has reduced the repo rate by a further 100 basis points.

"The monetary Policy Committee has decided to reduce the repurchase rate by 100 basis points to 7.5 percent per annum with effect from 29 May 2009," announced Reserve Bank Governor Tito Mboweni on Thursday.

The governor was speaking following a two-day meeting of the Monetary Police Committee in Pretoria.

This is the fourth consecutive cut of a 100 basis points - and the fifth cut in the last six months. The Reserve Bank has in the last six months reduced the repo rate by 450 basis points.

The announcement comes as South Africa's Gross Domestic Product (GDP) figures for the first quarter of the year show the economy shrank by an annualised 6.4 percent. This was the second contraction in a row since the last quarter of 2008 that slowed by 1.8 percent.