The South African Reserve Bank (SARB) has announced a cut of 50 basis points to the repo rate to 11.5%, following news last month that economic growth slumped in the third quarter.

Economic growth slowed dramatically in the third quarter with real GDP growing by a seasonally adjusted annualised 0.2% quarter-on-quarter, the lowest growth rate in ten years.

Concerns that South Africa’s high interest rates have been dampening economic growth appear to have prompted SARB to make the downward move, in line with the rest of the world.

Reserve banks in the US, UK and across Europe and Asia have all cut their interest rates sharply since the financial crisis that came to a head in October triggered the collapse of a string of high profile financial institutions.

The decision was largely expected with most pollsters predicting at least a half point cut, however some suggested it could be higher prompting the question, ‘when will the next rate cut come?’

SARB had hiked the repo rate by 500 basis points between June 2006 and June 2008 as the bank sought to rein in inflation.