South Africa cuts interest rate as moderating economy muffles momentum

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South Africa cuts interest rate as moderating economy muffles momentum

Later last week, the Central Bank of South Africa had slashed its key lending interest rate by 25-basis point to 6.50 percent as anticipated, citing that an interest rate cut was long overdue amid a weakening economic growth, while inflation indicators had been circulating around the Central Bank’s target range.

Adding that the inflation outlook over the region was largely balanced and the nation’s economic was expected to rebound after witnessing a contraction of 3.2 percent during first quarter of the year, Governor of Reserve Bank of South Africa said in a news conference following trimming interest rate, “The MPC welcomes the continued downward trend in recent inflation outcomes and the moderation in inflation expectations of about one percentage point since 2016”.

Since March 2018, SARB (Reserve Bank of South Africa) had not been slashing its interest rate despite immense pressure to soften monetary policy to grapple with an intensified fret over global growth on home and abroad.

Aside from that, following reveal of the rate cut, South African Rand had gained about 1.34 percent to 13.8150 South African Rand against American dollar on last Thursday (July 18th) as a 25-basis point cut was widely anticipated, but, lost some of its footings on Friday (July 19th) to wind down the day 0.87 percent lower to 13.9357 South African Rand following reveal of a report that US Federal Reserve was going to slash interest rate by 25-basis point, while financial markets were anticipating at least a 50-basis point rate cut on July 31st’s FOMC minutes.