Discussion | SARB cautions due to external and internal pressures

File: South African Rands. GettyImages/RapidEye
JOHANNESBURG – The Reserve Bank’s decision to cut the repo rate by 25 basis points was a correct approach,  says Chen Tseng of the Financial and Fiscal Commission. 
He said it was prudent given the economic climate internationally. However, domestically South Africa is still struggling with slow growth. 
“[T]he aspect of this is that the value transaction of our economy is not a value-added transaction and people are struggling with savings and are unable to push up the activities of the economy,” he said.
During the announcement on Thursday afternoon,  Governor Lesetja Kganyago said the cut to 25 basis points was more of a cautious approach, rejecting a bigger cut.
He said this is due to global economic challenges.
READ | Interest rates | Discussion | Repo rate slashed by 25 basis points
Kganyago added that South Africa continues to see a growth recovery taking hold, after a weak economic performance through 2023 and the first half of 2024.
He said in the near term there would be a variety of tailwinds, including lower inflation, higher disposable income, and extra spending from pension withdrawals via the new Two-Pot system.
Echoing his sentiments was Independent Analyst, Alex Malapane who told eNCA the current repo rate would bring a sense of relief to indebted customers.