afrol News, 28 May - The South African Reserve Bank's Monetary Policy Committee (MPC) has reduced the repo rate by a further 100 basis points.

"The monetary Policy Committee has decided to reduce the repurchase rate by 100 basis points to 7.5 percent per annum with effect from 29 May 2009," the Governor of the Reserve Bank, Tito Mboweni, announced today.

The governor's announcement follows the shocking news two days ago, that South Africa, was officially in a recession, making it the fourth consecutive cut on the repurchase rate in the last six months.

Statistics South Africa announced this week that the South African Gross Domestic Product (GDP) figures for the first quarter showed the economy had shrunk by an annualised 6.4 percent, the second contraction in a row since the last quarter of 2008 that slowed by 1.8 percent.

Today the state statistics bureau has also announced that the Producer Price Index (PPI) for April slowed to 2.9 percent, from 5.3 percent in March.

The bureau said the price indices for manufacturers and agricultural decreased by -02. percentage points, while electricity was at -0.1 percentage point.

Statistic SA however said the price indices for metal products increased by 0.2 of a percentage point.

Initially having believed that the global economic slump would not have much effects on the economy, South Africa economists were almost caught on the off-side when the mining and manufacturing sectors starting to feel the pinch, following a tough year of electricity cuts induced production cuts. Other sectors of the Southern Africa's economic hub, were also hit as demand and global prices were depressed further.

By staff writer

© afrol News

Related pages and feature

Current afrol News Top Stories