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Business Unity South Africa (BUSA) welcomes today’s decision by the Monetary Policy Committee to cut the repo rate by 0.5%. This moves the repo rate from 5.5% to 5% and is the first reduction in interest rates by the Reserve Bank since November 2010.
In light of slowing global growth and the continuation of the crisis in the Euro zone, as well as less-than-optimal forecasts for South African growth in 2012, BUSA believes the decision to lower interest rates will support an economic recovery. The Reserve Bank now sees growth of 2.7% for 2012, in line with BUSA’s expectations, and forecasts inflation to remain at around 5% and well within the target band in the foreseeable future.
The cut in interest rates sends an important market signal and should assist in boosting investment, consumption and business confidence.