On Thursday the Reserve Bank Governor Tito Mboweni announced a 50 basis point cut in the repo rate. The repo rate is the rate the South Africa reserve Bank lends money to banks which is now 11,5%.The banks lend to the general public at the prime rate which is 15% plus or minus depending on your relationship with the bank. Both the prime lending rate and the repo rate were reduced 50 basis points, this is a fancy way of saying the rates were reduced by half a percent.

The Reserve Bank Governor further commented that ,”South Africa was not in recession and was unlikely to slide into one”. I believe that it was the consumers who went into a recession. This meaning the South African consumers struggled to balance their finances. We are grateful and welcome the rate cut as consumers just before Christmas. The good news kept coming economist expect consecutive rate cuts next year. The Reserve Bank Governor Tito Mboweni also said that inflation will fall into their target (between 3% and 6%). This is good and means they don’t have to keep raising rates and all our repayments will start going down. Hopefully we the public were not all blacklisted yet and can get credit enough to buy Christmas presence and share in the spirit of Christmas.

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