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Financial News: South Africa Central Bank Unexpectedly Cuts Interest Rate

South Africa Central Bank Unexpectedly Cuts Interest Rate

01/16/2020 - 09:47:00 (RTTNews)

(RTTNews) - South Africa's central bank unexpectedly cut its key interest rate on Thursday, after keeping it unchanged for two policy sessions in a row, citing lower inflation.

The Monetary Policy Committee of the South African Reserve Bank, led by Governor Lesetja Kganyago, unanimously decided to cut the repurchase rate by 25 basis points to 6.25 percent. Economists had expected the bank to leave the rate unchanged.

"While the Committee would like to see inflation expectations anchored closer to the mid-point of the inflation target range on a sustained basis, the lower inflation forecast and improved risk profile opens some space to provide further policy accommodation to the economy," Kganyago said in a statement.

The SARB cut its 2019 GDP growth estimate to 0.4 percent from 0.5 percent. The central bank slashed the growth forecast for this year to 1.2 percent from 1.4 percent. The growth outlook for next year was lowered to 1.6 percent from 1.7 percent. The economy is seen expanding 1.9 percent in 2022. The central bank estimated average inflation for 2019 at 4.1 percent versus 4.2 percent seen earlier.

Inflation forecasts for this year was slashed to 4.7 percent from 5.1 percent, and that for 2021 was cut to 4.6 percent from 4.7 percent. Price growth for 2022 was forecast at 4.5 percent.

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