SARB cuts repo rate by another 25 basis points

The repo rate, at which the central bank lends money to commercial banks, now stands at 7%.

The prime lending rate has been lowered to 10.5%. The decision was unanimous.

The cut comes as a relief to struggling consumers amid a snail pace growing economy.

Consumer inflation ticked up to 3% in June, up from 2,8% in May.

Reserve Bank governor Lesetja Kganyago made the announcement on Thursday.

"The rand has strengthened and inflation expectations have moderated. The June CPI print showed headline inflation at 3% and core at 2.9%, still at the bottom of our target range,” he said. 

"We therefore expect headline inflation to rise over the next few months, averaging 3.3% for the year, in line with our earlier forecasts."

Kganyago also warned that higher tariffs could lead to disruption of the global economy, as the South African market braces itself for a 30% tariff hike imposed by the U.S from tomorrow.

"World oil prices spiked in June, due to escalating conflict in the Middle East, to date, global economic activity has been broadly resilient to these stresses.

"But there are risks that permanently higher tariffs, or adverse geopolitical developments, could cause more disruption to the global economy than we have seen so far this year." he added

Kganyago also said the MPC now prefers inflation to settle at 3%, down from the previous average of 4.5%.

ALSO READ: