South Africa Reserve Bank Cuts Interest Rates Surprisingly

Central bank of South Africa has surprisingly cut down interest rates Thursday in a move to stimulate the country’s economy.

This is the first time in past five years the baking system has taken such step following the unexpected recession at the beginning of 2017.

The South African Reserve Bank has been under pressure for past several months to bring down the high inflation rate.

In 2016 the inflation rate hit 7 percent.

Rand weakened after the announcement and it was down by 0.8 percent earlier today against USD.

SARB governor Lesetja Kganyago however said the inflation risks still remain in the country.

Meanwhile, the governor also said the latest move hopefully to provide some relief at the margin.

Kganyago added the bank may think over reversing the decision if the inflation outlook is changed and the risks are minimized.

South African economy is second largest after Nigeria and World Bank has ranked it as an upper-middle-income economy. Some of the main non-African international trading partners are Germany, China, Japan, United States, United Kingdom and Spain.

Unemployment rate is high in the country counting more than 25 percent and the poor has limited access to economic opportunities as well as basic services.