A one percentage point interest rate cut was widely welcomed yesterday as a boost for the economy, with some thought spared for pensioners and others who would be negatively affected.

Retailers should pass on savings from the interest rate windfall to pensioners and those living on fixed monthly incomes, the Democratic Alliance said.

These groups of people would have less money at their disposal because of the cut, and were in dire need of assistance, the party added.

The SA Reserve Bank earlier announced a one per cent cut in the repo rate - the rate at which it lends money to commercial banks.

This cleared the way for major banks to drop their prime lending rates to 13,5% from Monday.

The New National Party said the interest rate cut should stimulate economic growth. It would benefit exporters in particular, resulting in job creation and reducing poverty.

"It is a pity that the board of the Reserve Bank had not decided earlier to meet more frequently to analyse indicators of the fiscal and monetary status of the economy so that policy changes could be made timeously," NNP finance spokesperson Willem Odendaal said.

"The unnecessarily long intervals between meetings of the bank until now probably resulted in the economy cooling down too much".

According to the NNP, there was scope for another percentage point cut before year-end, but it advised that future adjustments should not exceed 0,5% at a time.

Excessive cuts could stimulate inflation.

For its part, the DA said Reserve Bank governor Tito Mboweni should explain why the announcement was made ahead of schedule.

The bank's monetary policy committee was due to have held its next meeting only in October.

"Financial markets thrive on stability and routine; it is still not clear why the scheduled MPC meeting for October was pre-empted," DA spokesperson Pierre Rabie said.

He added the cut should greatly promote business and consumer confidence.

The Federation of Unions of SA expressed the hope that the cut would not be the last for the year, while Old Mutual Personal Finance urged consumers to save the extra money.

"Now, many people have more money to spend, and it is a good time to take a fresh look at some personal finance planning," it said in a statement.

First National Bank welcomed the move as an unexpected boost to the economy, saying prospects were good for more cuts.

The central bank was expected to move "cautiously but steadily" for the remainder of the year in reducing rates, said FNB chief economist Cees Bruggemans.

"Barring any exchange rate or inflation rate surprises, we could see the prime rate fall to 12,5%this year". – Sapa.