SARB Governor Lesetja Kganyago.
DA leader John Steenhuisen.
The Democratic Alliance (DA) leader John Steenhuisen and his party welcomes the decision by the South African Reserve Bank (SARB) to reduce interest rates, which comes at a critical time for our economy.
This follows after South African Reserve Bank (SARB) Governor Lesetja Kganyago announced a cut in the repurchase rate (repo rate) for the country. He said the central bank is cutting the repo rate by 25 basis points (BPS), meaning rates will come down by 0.25%. And also confirmed that the repo rate will now be at 8% while the prime lending rate will come down to 11.50%.
The repo rate stood at a 14-year high of 8.25% and the prime lending rate at 11.75%. Governor Kganyago added that the members of the SARB’s Monetary Policy Committee (MPC) deliberated over a 25 BPS and a 50 BPS but decided to take a more conventional posture with a 25BPS cut.
Steenhuisen said: “This interest rate decrease is a positive step towards alleviating the pressure on South African households and businesses and reflects the improving economic conditions in the country. This announcement comes less than 100 days after the Democratic Alliance joined National Government, through the formation of the Government of National Unity (GNU). Since the inception of the GNU, we have seen a definite increase in confidence in Government, and a sense of hope has been restored in all South Africans.”
“This is evident in the strengthening of the rand, together with lower fuel prices and inflation finally falling below the SARB’s target of 4.5%. These are encouraging signs that South Africa’s economy is improving, and there will hopefully soon be some relief for South Africans who have been taking strain under the burden of an increasing cost of living. While there are significant global factors at play, we must recognise the positive impact of the GNU’s policy agenda, of which the DA is a key driver. A stronger currency and lower inflation are tangible results of this, paving the way for the SARB to shift focus from controlling inflation to stimulating growth.”
Steenhuisen said however whilst the DA is hopeful this will be seen as an opportunity to kick-start the economy. “We understand that sustained economic growth requires ongoing reform and decisive action to address South Africa’s long standing structural challenges. As inflation continues to stabilize, we believe that further opportunities for growth will emerge. However, it is vital that the GNU remains focused on delivering real and impactful reforms to secure a brighter future for all South Africans,” DA leader said.
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