More relief coming for households in South Africa this month

The South African Reserve Bank’s (SARB) upcoming Monetary Policy Committee (MPC) meeting in November 2024 is widely anticipated to bring further interest rate cuts.

These expectations follow recent dovish adjustments by the central bank amid a backdrop of easing inflation, now comfortably below the SARB’s target midpoint of 4.5%​.

With inflation down to 3.8% in September, the lowest in over three years, experts forecast that the SARB will likely continue reducing its policy rate to support economic recovery.

However, opinions vary on the pace and extent of these cuts, with most experts forecasting a cautious, gradual approach to avoid excessive market volatility.

Some South African economists are forecasting that the South African Reserve Bank (SARB) may implement a 50 basis point rate cut in November.

Goldman Sachs is among the more optimistic forecasters, suggesting a “front-loaded” approach by the SARB, which could result in a substantial reduction in the policy rate to counteract easing inflationary pressures.

Goldman Sachs predicts this shift in policy partly because of the strengthening rand and weaker inflation figures, which support a larger rate cut.

This expectation aligns with SARB Governor Lesetja Kganyago’s recent comments indicating a policy space for easing, as inflation could trend below 4% in upcoming months.

However, opinions vary among experts. Bloomberg Economics expects more modest easing, predicting two incremental cuts of 25 basis points each, with one in November, which would bring the interest rate to 7.5%.

Nedbank and RMB agree, and expect the SARB to maintain smaller increments of 25 basis points per meeting, bringing the repo rate to around 7.5% by mid-2025.

This more conservative view aligns with the central bank’s cautious tone in recent statements, where Governor Lesetja Kganyago emphasised the importance of avoiding “adventurism” in monetary policy to maintain financial stability amid global uncertainties​

The SARB is balancing the need to support domestic economic growth with prudence around global inflation risks and currency stability, aiming for a balanced, sustainable approach to monetary easing.

If realised; however, the 50 basis point cut would signal SARB’s commitment to supporting economic recovery without compromising its primary mandate of inflation targeting.

This potential rate cut is seen by many analysts as a positive step for both consumers and businesses, aiming to alleviate financial pressures and foster a more robust economic outlook heading into 2025.

As every bond differs, we have decided to look at the possible savings that a 20-year bond with no deposit and a prime interest rate will receive following the latest cut.

The latest data from Ooba Home Loans showed that the average house in South Africa costs R1,458,924.

With the price drop, the bond repayment for the average house dropped from R15,558 per month to R15,059 per month – a saving of R499 per month.

The savings on bonds for properties prices between R750,000 and R5 million can be found below:

Read: How South africa is earning over R200 per person by doing nothing