REPO & INTEREST RATES

REPO & Mortgage Rates

South African Reserve Bank (Sarb) Governor Lesetja Kganyago announced the bank's decision on interest rates.

Kganyago has announced that the SA Reserve Bank would be reducing the repurchase rate by 25 basis points to 6.25% per annum .

Kganyago said,  "Monetary policy actions will continue to focus on anchoring inflation expectations near the mid-point of the inflation target range in the interest of balanced and sustainable growth. In this persistently uncertain environment, future policy decisions will continue to be highly data-dependent, sensitive to the balance of risks to the outlook, and will seek to look-through temporary price shocks. The implied path of policy rates over the forecast period generated by the Quarterly Projection Model indicated two repo rate cuts of 25 basis points each in the first and fourth quarters of 2020. This remains a broad policy guide which could change in either direction from meeting to meeting in response to new developments and changing data and risks."

"While the rand has benefited from improvements in global sentiment, high long term bond yields reflect concerns about domestic growth prospects," the Reserve Bank governor said. 

Kganyago said that the forecast of GDP growth for 2019 is revised lower to 0.4% (from 0.5%). 

The decision by the Reserve Bank's Monetary Policy Committee to cut the repo rate by 25 basis points to 6.25% (from 6.5%) reducing the mortgage rate to 9.75% (from 10%) is welcomed by homeowners, but the general feeling is that more is needed to ease the burden on the homeowner and to promote further home buying in the market.

Ahead of the announcement, Investec's Annabel Bishop said, "Interest rates are expected to remain flat this quarter ahead of Moody's country assessment on 27th March."