In a unanimous decision, the South African Reserve Bank’s Monetary Policy Committee (MPC) has voted to lower the repo rate by 25 basis points, bringing it down from 8% to 7.75%. This reduction, effective Friday, marks the second consecutive rate cut by the MPC, reflecting a cautious yet optimistic approach to South Africa’s economic outlook.
Reserve Bank Governor Lesetja Kganyago announced the decision after a meeting of the MPC, noting that the move aligns with the recent drop in inflation, which has reached 2.8%—the lowest since June 2020, according to Statistics South Africa. “The committee agreed that reducing the level of policy restrictiveness remains consistent with achieving the inflation target,” Kganyago explained.
While the global economic landscape remains volatile, with potential increases in global interest rates, the Reserve Bank governor highlighted the risks posed by currency fluctuations, particularly the recent depreciation of the South African rand. The MPC forecasts a gradual easing of rates in the coming months, though it emphasized that future decisions will remain flexible, dependent on ongoing economic data and global developments.
Kganyago made it clear that while the current rate reduction aligns with the bank’s broader inflation target, which remains slightly above the 3–6% range, future rate adjustments will be made on a meeting-by-meeting basis, without any pre-committed path. This approach ensures that the MPC remains responsive to both domestic and international factors affecting South Africa’s economic stability.
For insights into this development, Kaya Biz spoke with Koketso Mano, Senior Economist at FNB, who shared expert analysis on the implications of this rate cut for consumers and businesses alike.
