The S.A.R.B cut its repo rate by 100 basis points to 7.5 percent today, in an effort to try stimulate the economy. Which is now (in case we hadn't noticed) officially in recession. The first recession in 17 years!
This 100 basis point reduction adds to 350 basis points in cuts since December 2008 and takes the repo rate to its lowest level in nearly 3 years! This brings the prime lending rate down to 11%.
The rate cut comes after data on Tuesday showed GDP shrank by 6.4 percent in the first quarter - the biggest fall since 1984 and after a 1.8 percent contraction in Q4 2008 - plunging the economy into recession as a global downturn hits manufacturing and mining.
Perhaps we wouldn't be in this position if the government took a more pro active approach in December 2008 when it could easily taken drastic steps by a more aggressive rate cut.
