Fin24 reports that Reserve Bank Governor Gill Marcus cut interest rates by 50 basis points on Thursday, bringing the figure to 5.5%, in line with market expectations.
The finance news outlet said that the rand was expected to weaken on the news. The unit has strengthened more than 28% since the beginning of 2009, largely due to capital inflows from investors in developed economies where rates are close to zero. There has been serious concern about the rand in recent times as its robust health has seen an increase in imports and decrease in exports, which has hit a number of industries and employers hard.
Relief as Reserve Bank cuts rate
Although consumer inflation is at a five-year low at 3.2%, and there has been a recovery in consumer spending, the rate cut indicates the MPC’s concern for SA’s sluggish recovery.