Rate cut a relief but not enough to turn the economy around: Economist
Chief economist at Econometrix, Azar Jammine says while Thursday’s lowered repo rate will offer some relief for debt-ridden consumers, it is not enough to save SA’s economy.
South African Reserve Bank (SARB) Governor, Lesetja Kganyago announced that the Monetary Policy Committee (MPC) decided to cut the repo rate by 100 basis points, taking it to 5.25% per annum effective from March 20th.
Commercial banks are expected to reduce their prime overdraft rates by 1% accordingly.
“This will come as a welcome relief to those consumers with any debt, because it is a substantial reduction in a debt service cost - bigger than anything was seen in a couple of decades,” says Jammine.
Although the repo rate cut will ease monthly payments for consumers, Jammine says it doesn’t resolve much of the economic problems faced by the country.
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“It still doesn’t resolve all the economic problems that are facing South Africans in the next month or two as a result of the closure of general economic activities in many areas. Lower interest rate alone will not solve the difficulties that they face,” he says.
Listen to Jammine below: