South African central bank cuts repo rate to 6.5 pct

JOHANNESBURG, March 28 (Xinhua) -- South African Reserve Bank (SARB) Governor Lesetja Kganyago said on Wednesday that the repurchase rate has been cut by 25 basis points to 6.5 percent.

The prime lending rate, which is the interest charged by banks to clients, is now at 10 percent.

"The MPC decided to reduce the repurchase rate by 25 basis points to 6.5 percent with effect from March 29. Four members preferred a reduction while three members preferred an unchanged stance," Kganyago told journalists in Pretoria.

The central bank last cut rates in July 2017, as the consumer inflation outlook improved, but was cautious of the sluggish economic growth.

Meanwhile, consumer inflation has remained within the bank's target of 3 percent to 6 percent for the past year and is expected to average 4.9 percent this year, according to the central bank.

"The domestic growth outlook is more positive but still challenging," Kganyago said.

"Growth in the fourth quarter surprised significantly to the upside, and there are signs of increased business confidence."

South Africa's rand traded at R11.74 to U.S. dollar at 4: 15 p.m. from about R11.69 before.

Before the monetary policy meeting, First National Bank chief economist Mamello Matikinca told Xinhua that any cut was unlikely to be a unanimous decision.

Citi Bank's South Africa economist, Gina Schoeman said South Africa's economy has improved so very much since the last MPC meeting.

"A lot of inflation risk has reduced and the local unit has so far stronger," said Schoeman.

The South Africa Reserve Bank cut the repo rate because of improved economic growth that came in better than expected in the fourth quarter, and Moody's decision to leave South Africa's credit rating one notch above junk status and improve its outlook to stable.

The bank's monetary policy committee last cut rates at its July 2017 meeting, which was the first cut in five years and took the repo rate to 6.75 percent.

Some experts note that the Wednesday's cut was likely to be followed by more cuts coming in the future.

The bank's three-day meeting was held from Monday to Wednesday this time, instead of the usual Tuesday to Thursday, due to the Easter holiday weekend. Enditem