MONDAY, 10.30AM
THE Standard Bank announced rate cuts on Monday morning, following behind First National which stole a march on it by announcing the same cuts on Sunday. Both were responding to Friday night’s announcement by Reserve Bank governor Chris Stals of a long-expected rate cut from 17% to 16%
First National said it would cut prime overdraft rates from 20,25% to 19,25% and its rate on new home loans from 20% to 19% with immediate effect. The rate on existing home loans would only drop from November 1. Standard Bank announced the same figures, but said its changes take effect only from November 1. The other banks are expected to follow shortly.
Stals has for months been under intense public pressure, in particular from the business press, to allow a cut in rates, following a steady fall in inflation and retail spending, and improvements to the foreign exchange reserves.
The rand is expected to slip steadily over the next few weeks as a result of the announcement, but economists seem to welcome that as preferrable to sudden depreciation. Economists are now engaged in a guessing game as to when the next rate cuts will come. Stals hinted at further cuts when he could be confident of a “prudent” Budget, which would suggest a rate cut some time in the second quarter of next year.