The South African Reserve Bank's Monetary Policy Committee (MPC) on Wednesday (10 September) announced a 100 basis-point (bps) cut in the repo rate to 10 per cent at the conclusion of a special meeting in Pretoria.
The SARB surprised the market on 5 September by announcing that it would convene a special MPC meeting on 10 September to "examine major underlying trends in the economy".
Since the announcement, markets have been fairly volatile, with the bond market anticipating at least a 100 basis points cut.
Citing reasons for the cut SARB governor Tito Mboweni said that the global economy was recovering from a weak second quarter while South African output remained below potential as seen by the decline in capacity utilisation. He said global inflation is expected to remain subdued and domestic inflation expectations have fallen across the board.
He added that the bank stood ready to take appropriate action if circumstances changed radically...
