An expected pause in interest rate cuts by the SA Reserve Bank

SOUTH AFRICA - Report 21 Mar 2025 by Iraj Abedian

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) announced that it is leaving the benchmark interest rate unchanged following three consecutive cuts. We had largely expected this decision as we noted following the January decision. The repurchase (repo) rate, hence, remains at 7.5%, and the prime lending rate at 11%.

While South Africa’s annual inflation remains below the Reserve Bank’s preferred rate of 4.5% (the mid-point of the inflation target range), it has been moving further away from its recent lowest reading of 2.8% recorded in October 2024. The latest figures released by Stats SA show that the country’s inflation remained stable at 3.2% year-on-year in February, unchanged from January’s print. This suggests that while inflationary pressures have eased significantly compared to early 2024, price growth is no longer decelerating at the same pace. The stabilization at 3.2% could reflect a balancing act between subdued consumer demand and persistent cost pressures in certain sectors, such as administered prices.

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