South Africa cuts key rate for first time in over a year

South Africa’s central bank shifted policy to help boost the economy and now the government must do its part to make the first interest-rate cut in more than a year more effective.

That was the message from the Reserve Bank’s Monetary Policy Committee after agreeing to lower the repurchase rate to 6.5% from 6.75%. It was the first time since the central bank starting giving the breakdown of the vote in 2016 that the panel was unanimous in deciding to change policy. All but four of the 22 economists in a Bloomberg survey predicted a cut.

“For our 25 basis points to have a significant impact, this must be complimented by other structural reforms that deal with these underlying issues in the economy,” deputy governor-designate Fundi Tshazibana told reporters in Pretoria. “If you just take the impact of monetary policy alone, it will have a temporary effect that will fizzle out over time if it’s not complimented.”

The adjustment may give a fillip to consumers and an economy that contracted the most in a decade in the first quarter. While the central bank said the country probably avoided a recession given an expected rebound in the three months through June, it lowered its growth forecast for the year to just 0.6%.