Good news for consumers. The Reserve Bank dropped the repo rate by one and a half basis points to 12 per cent on Thursday.

Good news for consumers. The Reserve Bank dropped the repo rate by one and a half basis points to 12 per cent on Thursday.

This means that interest rates drop from 17 per cent to 15,5 per cent. The cut is effective from Friday. It is the first interest rate reduction since 2001.

Reserve Bank governor Tito Mboweni also announced that the Monetary Policy Committee would in future meet every two months and not just each quarter.

"In taking this decision, the committee recognises the progress achieved so far in reducing inflation and the prospect that inflation may fall within the target range later this year,” Mboweni said.

"But the committee will remain vigilant to the risks going forward, particularly those relating to wage settlements, administered prices and the uncertain outlook for the global economy.

"The committee will be ready to take whatever actions are necessary in either direction in the light of the way future risks materialise," Mboweni said.

Standard Bank, First National Bank and Absa become the first financial institutions to drop their interest rates. Other banks are expected to follow soon.

The South African Chamber of Business (Sacob) said it welcomed the rate reduction. “The Chamber believes that additional cuts should be made before the end of 2003 to prevent the economy sliding further into recession,” said Sacob chief executive James Lennox after the announcement.

Original article from Car