Johannesburg – 14 April 2020 – The Steel and Engineering Industries Federation of
Southern Africa (SEIFSA) welcomes the South African Reserve Bank’s surprise
decision to reduce the repo rate for the second time in less than a month, the
Federation’s Economist, Marique Kruger, said this afternoon.
The Reserve Bank has cut interest rates by one percentage point, bringing the repo rate
down to 4.25 percent. The 100-basis point cut follows a 100-basis point cut on March
19, as the Government rallies to support businesses suffering from the COVID-19
lockdown. In January, the Bank cut interest rates by 25 basis points.
Speaking after the announcement, Ms Kruger said SEIFSA welcomes the decision as
local businesses need every support available. The lowered interest rate is, she said,
encouraging and has the potential of reducing borrowing costs for struggling businesses
by boosting cashflow, while stimulating consumer demand and boosting production
towards better growth.
“The decision provides some relief for businesses which continue to operate in a tough
economic environment, underpinned by non-descript domestic growth, subdued
demand, high unemployment and low business confidence,” said Ms Kruger.
She added that the monetary policy intervention is welcome, especially given the
negative gross domestic product growth in the third and fourth quarters of 2019, which
effectively catapulted the South African economy into a technical recession.
“The verdict by the Reserve Bank is, therefore, encouraging as the need to further
stimulate demand, improve on an ever-weakening output, and arrest a gradual decline
into an economic depression is vital.”
Generally, the lowered interest rate has the potential to reduce borrowing costs of direct
investors and domestic companies, thus benefitting key industries which are drivers of
the metals and engineering sector’s domestic demand and supply patterns, and
boosting overall demand for its intermediate products, against the backdrop of the
global coronavirus pandemic.
Ends
Issued by:
Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za