Covid-19: Reserve Bank cuts interest rates by 1% amid pandemic

Covid-19: Reserve Bank cuts interest rates by 1% amid pandemic

- The Reserve Bank has cut interest rates by one percentage point for the second time

- The repo rate is now down to 4.25% since Tuesday morning, resulting in the rand taking a knock

- This is understood to be a response to the current coronavirus pandemic

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The Reserve Bank has announced that it has cut interest rates by one percentage point on Tuesday.

This is the second time in less than a month, bringing the repo rate down to 4.25% with the 100 basis point cut.

In total, the Reserve Bank has cut the rate with 225 basis points this year with the latest cut closely following President Cyril Ramaphosa's announcement that the coronavirus lockdown would be extended. reported that Ramaphosa had confirmed the lockdown would continue for a further two weeks in a bid to tackle the virus that has caused global devastation.

READ ALSO: Coronavirus: President Ramaphosa extends lockdown by 2 more weeks

Interest rates are now at the lowest in history, following trends seen overseas as banks attempt to offset the economic damage done by the pandemic.

BusinessLIVE spoke to economist William Jackson who indicated that the outlook remains grim

“The government will undoubtedly have to do more to support households and companies facing a dramatic loss of income. But, with poor public finances likely to constrain the size of the response, monetary policy will have to do more of the heavy lifting.”

Shortly after the announcement, the rand dropped 0.2% to R18.12 to the US dollar.

Leading up to Ramaphosa's announcement, one of the biggest concerns had been how the economy would fare with limited growth and high unemployment rates, which were already an issue before the pandemic arrived in South Africa.

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