Cape Town - South African Reserve Bank Governor Tito Mboweni on Thursday brought cheer to citizens across the country when he cut the rate at which the central bank lends to other banks.

Mboweni said the Monetary Policy Committee 'has noted improvements in the inflation outlook' but risks still remained.

The bank's Monetary Policy Committee (MPC) ended its two-day meeting by announcing it would cut the rate at which it lends to banks by 50 basis points to 11.5 percent, the first reduction after making a total 5 percentage point hike since June 2006.

FNB economist Sizwe Nxedlana told SABC before the announcement that oil prices and dramatically lower global growth should already be showing in inflation figures

Nxedlana mentioned that falling petrol prices would play a positive part too. "I'm already happy to pay only R7.35 to fill my tank and there's another petrol price cut coming soon." he said.

Stanlib economist Kevin Lings told SABC that "from our perspective there's every reason to cut rates."

Lings said there were suggestions that the bank could go as far as cutting rates by 200 basis points. But this could put the rand under significant pressure, he warned, and Mboweni was likely to play it safe and make a smaller cut.

Mboweni mentioned several other key points in his statement that would influence the outlook for inflation and interest rates:

The rand has depreciated against the dollar by 11 percent.

International oil prices 'have clearly come down'.

The trend in international food prices has also followed that of the slump in other commodities.