Repo rate cut

The Reserve Bank's Monetary Policy Committee has decided to cut the interest rate by 25 basis points - from 7% to 6.75%. 

Commercial banks are as a result set to adjust the prime lending rate from 10.5% to 10.25%.

Four members of the MPC voted for the decrease, while two members wanted it to remain unchanged. 

Reserve Bank governor, Lesetja Kganyago, says the decision was influenced by the inflation outlook. 

"Given the improved inflation outlook and the deteriorated growth outlook, the MPC has decided to reduce the repurchase rate by 25 basis points with effect from 21 July, to 6.75% per annum."

Kganyago says this does not mean the country's economy is out of the woods. 

"Underlying demand in the economy is extremely weak and the MPC is concerned about the deterioration in the growth outlook over the forecast period. This decline is broad-based. It is unclear where the drivers of accelerated growth will come from in the absence of credible structural policy initiatives that will reduce uncertainty and increase business and consumer confidence."

He says cutting the interest rate will not help grow the economy.