[News] SARB cuts Repo rate

The rate cut decision took place in the context of a year-on-year inflation rate of 3.6% in November 2019 (down from 3.7% in October 2019), comfortably within the Bank's target range of 3-6%.

The SARB lowered its GDP growth forecast to 1.2% for 2020 (down from 1.4%) and 1.6% (down from 1.7%) for 2021. The SARB's GDP forecast for 2022 is 1.9%.

The SARB provided forward guidance on future rates decisions, indicating an additional rate cut of 25 basis points in Q4 2020.

As the CRA, we think that the narrowing of the interest rate differential – as the risk equation on SA expands – is something to watch very closely.

This note was originally circulated to CRA clients via WhatsApp.