UASA is pleased with the decision of the Monetary Policy Committee (MPC) of the South African Reserve Bank to lower the repo rate with 25 basis points to 6.25%.
This should go a little way towards giving the country the much needed positive economic shock it needs to turn it around, although we do believe that a drop of another 25 basis points would made the difference.
Our economy is struggling with the highest unemployment rate in the country’s history and one of the lowest periods of economic growth, personal income taxes increased in real terms, business and consumer confidence are at extremely low levels, more consumers are falling in arrears with debt, pension funds are struggling to yield positive real returns and the country is on the brink of a ratings downgrade.
The lower repo rate is on par with many other countries that have already reduced their interest rates in order to prevent the world economy from entering an economic recession. The MPC did well to follow suit, as the lower interest rate will stimulate consumption spending and a number of investment projects viable. It also lowers government debt service repayments, one of the big thorns in the country’s side.
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