The repo rate cut came as a surprise as experts expected the bank to keep it unchanged. The last cut was in July.
Governor Lesetja Kganyago said certain measures were required to revive growth and investments.
"Implementation of prudent macroeconomic policies and structural reforms that lower costs and increase investment, potential growth and job creation remains urgent," he said.
The governor said the growth expected for 2019 was 0.4 percent, down from the previous estimate of 0.5 percent.
"The forecasts for 2020 and 2021 have also decreased to 1.2 percent (from 1.4 percent) and 1.6 percent (from 1.7 percent), respectively, due to lower growth than previously expected in quarter three and four. The GDP forecast for 2022 is 1.9 percent," he added.
Labor federation Congress of South African Trade Unions (Cosatu) said with millions of indebted consumers, the Reserve Bank must cut interest rates in the next three quarterly meetings.
"This will provide some relief to consumers who are struggling with the cost of living. Hopefully, this will also make it easier for small businesses to expand and with any luck spur economic growth," Cosatu said in a statement.
Prof. Jannie Rossouw, head of School of Economic and Business Sciences at the University of the Witwatersrand, said he had expected the rate cut because the inflation was in line.
"The inflation rate is well below the target of the midpoint of a target range and it's expected to stay there,"he told Xinhua.
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