Another Major Repo Rate Cut
The recent repo rate cut of another 100 basis points or 1 percentage point brings South Africa's repo rate to 4.25%. This also means that the prime lending rate has dropped from 8.75% to 7.75%. This is unprecedented and is certainly a response to COVID-19 as a cut in repo rate is necessary to mitigate the effects the virus has had on the economy. It is also seen as a necessary means to try and restore the economy once the lockdown as been lifted.
Industries and consumers who are under a great deal of financial pressure due to the ongoing lockdown will welcome the second major repo cut - as will the property sector. The 1% repo rate cut means that it will be somewhat easier for South Africans to qualify and pay off their home loans, once things return to normalcy.
The decision to cut the repo rate by a further 1% shows us the seriousness of the virus' effects on the economy and the earnest efforts the South African Reserve Bank is making to ensure that our economy keeps going.
15 Apr 2020
Author Greeff
