SARB cuts interest rates by another 100bps in wake of Covid-19

In an unprecedented move in the wake of the coronavirus the South African Reserve Bank cut interest rates by another 100 basis points to 4.25%.

The SARB said in a statement that the May 2020 meeting of the MPC was moved earlier and took place today. The MPC will host a media briefing later today.

The rand weakened after the surprise announcement and is currently trading at R18.15 after trading around the R18.00 level for most of the day.

Also read: SARB's 1% rate cut; and what it means for your bond

The move is to help stimulate the already limping economy as it takes a battering from an extended nationwide lockdown to 35 days to slow the spread of the Covid-19 pandemic.

The economy which is in recession is expected to contract as much as 4% this year, all while Moody's Investors Service cut the country's debt to junk on March 27 and Fitch Ratings lowered its assessment deeper into sub-investment grade a week later.

The latest cut brings the total decrease in interest rates since the beginning of the year to 225 basis points.