Another cheer for people in South Africa today! The South African Reserve Bank’s (Sarb’s) monetary policy committee (MPC) has cut the key repo rate by 100 basis points, bringing it down to 9.5%, with the prime lending rate dropping to 13%. This rate cut takes the cumulative cut since December 2008 to 250 basis points. Many economists had predicted this 100 basis point cut today and they expect another 100 basis point cut in April.

Some of you may wonder why these drops are occurring so regularly when in the past the MPC did not meet as often. The committee announced on March 18 that it would be changing meeting dates for the rest of 2009, with the committee meeting every month, except for July.

Reserve Bank governor Tito Mboweni said that the decision to cut rates was based on an improved medium-term outlook for inflation and the volatile global environment.

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