The South African Reserve Bank’s third consecutive rate cut amid rising uncertainties

SOUTH AFRICA - Report 30 Jan 2025 by Iraj Abedian

Having convened for its first 2025 meeting this week, the South African Reserve Bank’s Monetary Policy Committee (MPC) announced its interest rate decision today. In line with market expectations, the MPC voted to reduce the benchmark interest rate by 25 basis points to 7.5%. This marks the third consecutive meeting at which they did so. As such, the prime lending rate has come down to 11%.

The decision aligns with the Reserve Bank's mandate to maintain price stability, reflecting current inflation trends. South Africa's annual inflation rate remains within the Bank's target range of 3% to 6%. However, the latest figures indicate that inflation edged up to 3% year-on-year in December 2024, slightly higher than the 2.9% recorded in November. Still, December marked the fifth consecutive month during which annual inflation was below the Reserve Bank’s preferred rate of 4.5%, i.e., the mid-point of its target range.

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