OFFICIAL INTEREST RATE UNCHANGED

The monetary policy committee of the South African Reserve Bank has decided to keep the repo rate unchanged at 6.5%.

At its last meeting in March, the MPC reduced the repo rate by 25 basis points to 6.5% in line with market expectation. This was the first time since July 2017 that the central bank reduced the repo rate.

The rate of 6.5% came into effect 28 March 2018.

For employers, the official interest rates of 7.5% on payrolls came into effect 1 April 2018.

The definition of “official interest rate” in the Seventh schedule of the Income Tax Act means:

  • In the case of a loan which is denominated in the currency of the Republic, the South African repurchase (repo) rate + 100 basis points; or
  • In the case of a loan which is denominated in any other currency, the South African repurchase rate applicable in that currency +100 basis points.

Where a new repurchase rate or equivalent rate is determined, the new interest rate applies for the purposes of this definition from the first day of the month following the date on which that new repurchase rate or equivalent rate comes into operation.

 

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