SA Reserve bank cuts interest rates good news for the Property Market

https://m.fin24.com/Economy/sa-reserve-bank-cuts-interest-rates-20180328-2

Cape Town – The monetary policy committee of the SA Reserve Bank has decided to cut interest rates by 25 basis points.

This means the repo rate is now 6.5% and the prime lending rate 10%.

The last time the central bank cut the repo rate was in July 2017, when the MPC reduced the rate by 25 basis points from 7% to 6.75%.

The repo rate is the benchmark interest rate at which the Reserve Bank lends money to commercial banks and the prime rate the rate at which commercial banks lend money to borrowers.

Kganyago said the inflation forecast of the bank has shown a moderate improvement. Indications are that a low point of the inflation cycle has been reached. The main changes in the forecast relate to the exchange rate, among others things, he said.

He cautioned that the SARB's 5-year inflation expectations have declined. He said the MPC would prefer its inflation expectation anchor closer to the mid-point of the target range of 3% to 6%.

He aid the rand has reacted positively to recent political developments and the recent ratings announcement by Moody's. Further support for the rand has come from recent dollar weakness.

He listed as a key risk to the rand the possible fiscal tightening in the US.

The rand was trading softer at R11.76 to the US dollar immediately after the announcement.

The bank has improved South Africa's growth forecast for 2018 to 1.7% from 1.4% during January, mostly on the back of improved business and consumer confidence.