South Africa is First Country to Lower Rates After Fed Cut — WSJ

By Alexandra Wexler

JOHANNESBURG--The South African Reserve Bank cut its main repo rate on Thursday, the first central bank to follow the Federal Reserve's move to lower borrowing costs.

The SARB lowered the main repo rate--the interest rate at which a country's central bank lends money to commercial banks--to 8% from a 15-year high of 8.25%, as inflation eases amid a stronger rand currency, lower oil prices and a more steady national electricity supply.

SARB Governor Lesetja Kganyago said rates should stabilize "slightly above 7%" next year. The decision brings to an end a tightening cycle that began at the end of 2021, as a response to the coronavirus pandemic.

The Fed's decision will likely affect the actions of central banks around the world, paving the way for others to cut rates without affecting the interest-rate differential between themselves and the U.S., which should cushion the impact on local currencies. Analyst consensus was for both the U.S. and South Africa to cut this month.

Write to Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

September 19, 2024 09:56 ET (13:56 GMT)

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