The Black Business Council (BBC) welcomes the decision by the South African Reserve Bank (SARB)’s Monetary Policy Committee (MPC) to cut the repo rate by 25 basis points.

The repo rate has remained unchanged since the last quarter of 2018 (November 2018) when the MPC introduced a 25-basis point hike which raised the repo rate to the previous rate of 6.75%.

“We welcome the MPC’s decision to decrease the repo rate as this will bring much needed relief to overburdened consumers and our members who are in the main Small, Medium and Micro-sized Enterprises (SMME’s) sector with short-long term capital loans” says the BBC CEO Kganki Matabane.

The BBC is however, of the view that the MPC missed a glorious opportunity to reduce the rate last time they met.

The scope exists for a more ambitious 50 basis point reduction, which would give the economy a proper push. This is the tangible stimulus that the economy needs for growth and employment.

Recent months have not been easy on consumers and small businesses especially with continued hikes in utilities, fuel and other prices of essential goods and services. The contraction in the economy as well as the rise in unemployment rate have similarly not assisted the situation. A cut in the repo rate will, therefore, bring the prime lending rate down to 10% thereby increasing economic activity and bring much needed relieve to the hard-pressed consumers.

The decrease in the repo rate will also give government the necessary window to assess further mitigating policies to steer our economy away from a potential recession.

 

Issued by The Black Business Council