Is There Evidence of Asymmetries in the Adjustment of the Lending Rate Responses to Repo Rate Changes?

  • Eliphas Ndou
  • Nombulelo Gumata
  • Mthokozisi Mncedisi Tshuma


We find that the interest rate pass-through and the loan intermediation mark-up move in opposite directions and differs across the monetary policy tightening and loosening cycles. A high (low) mark-up is accompanied by a low (high) pass-through. In addition, positive repo rate changes are passed more to lending rate increase than policy rate decreases of the same magnitude. This is indicative of the asymmetric effects in the lending rate adjustment to increases and decreases in the repo rate changes. Evidence shows that the speed of correction towards equilibrium is bigger when lending rates are below the equilibrium compared to when lending rates are above the equilibrium. Lending rates adjusts upwards when below the equilibrium more quickly than adjusting downwards when they are above the equilibrium.


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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
  • Nombulelo Gumata
    • 2
  • Mthokozisi Mncedisi Tshuma
    • 3
  1. 1.South African Reserve BankPretoriaSouth Africa
  2. 2.PretoriaSouth Africa
  3. 3.National Planning Commission SecretariatPretoriaSouth Africa

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