Johannesburg - The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has cut the key repo rate by 100 basis points, bringing it down to 8.5%, with the prime lending rate dropping to 12%, with effect from May 4. The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers. The cut brings the cumulative drop in lending rates to 350 basis points since December 2008. Reserve Bank governor Tito Mboweni noted that the global economy remains under pressure despite fiscal and monetary stimuli, with emerging economies experiencing 1.8% growth in 2009 according to the International Monetary Fund. The outlook for domestic economic growth remains subdued, with no indications for short-term recovery, he said. Twenty-five of 26 economists polled by Reuters expected the committee to cut the repo rate by one percentage point, with one expecting a 50 basis-point cut. The Reserve Bank's announcement was brought forward by to 12:30 due to Friday being a public holiday and because of all the economic data coming out on Thursday, a Reserve Bank spokesperson Brian Hoga told I-Net Bridge. Rate-change announcements are traditionally made at 15:00 on the final day of the two-day MPC meetings. - Fin24.com
