US, WASHINGTON (ORDO NEWS) — The Reserve Bank of South Africa has lowered its base interest rate in an effort to support the already fragile economy, which is expected to be hit hard by the new coronavirus, Bloomberg reports .
The Monetary Policy Committee of the Central Bank of South Africa voted to reduce rates to 5.25% from 6.25%, the lowest level for 6 years, Governor Lesetja Kganyago said at a meeting of the Central Bank.
The decision of the five committee members was unanimous. The rate cut turned out to be stronger than the forecast of 21 economists surveyed by Bloomberg.
The central bank’s quarterly forecasting model indicates three repo rate decreases of 25 basis points in the second and fourth quarter of 2020, as well as in the third quarter of 2021.
While this decision will provide some assistance to businesses and consumers facing disruptions due to coronavirus outbreaks, the Reserve Bank said that only monetary policy could not push economic growth.
Currently, the Central Bank Committee predicts a decline in the South African economy by 0.2% this year compared with a forecast of growth of 1.2% in January.
For the first time in 15 months in February, inflation in South Africa rose above the average of 4.5% of the target range of the central bank, but it is expected that it will be moderate in the coming months amid a sharp decline in oil prices.
The central bank has revised its forecast for price growth for the year to 3.8% from 4.7% earlier.
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