The reduced repo rate and resultant lower debt servicing costs will bring some relief to consumers and business alike, the South African Chamber of Commerce and Industry (Sacci) said on Thursday.

This followed the earlier announcement by South African Reserve Bank Governor Tito Mboweni that the Central Bank's Monetary Policy Committee (MPC) had decided to cut the repo rate by 100 basis points.

"The psychological impact of further stimulative monetary policy will encourage business activity against an otherwise gloomy prognosis for the first half of 2009," SACCI CEO Neren Rau said.

The decision by the MPC demonstrated its ability to move beyond the narrow, technical confines of the inflation targeting policy and accommodate broader economic considerations.

"Although inflation is marginally outside the target range, consumer inflation figures over recent months have been plagued by volatility that prevents a trend being established," Rau said.

Equally volatile over recent months were Sacci's Business
Confidence and Trade Conditions Indices, although both sets of indices clearly indicated very challenging conditions in the business environment.

The trade conditions indices did, however, indicate subsiding inflationary pressures, both currently as well as over the short term, Rau said.