{"id":837934,"date":"2025-09-19T09:10:09","date_gmt":"2025-09-19T07:10:09","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=837934"},"modified":"2025-09-19T09:10:30","modified_gmt":"2025-09-19T07:10:30","slug":"interest-rate-cuts-still-on-the-cards-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/837934\/interest-rate-cuts-still-on-the-cards-for-south-africa\/","title":{"rendered":"Interest rate cuts still on the cards for South Africa"},"content":{"rendered":"\n

The South African Reserve Bank’s (SARB’s) decision to keep interest rates on hold this week may have come as a surprise and disappointment to some, but economists say the central bank may just be pausing for a breather.<\/p>\n\n\n\n

The SARB’s Monetary Policy Committee (MPC) voted 4-2 on Thursday (18 September) to keep the country’s repo rate at 7.00%, with the prime lending rate still set at 10.50%.<\/p>\n\n\n\n

The move surprised some market commentators, given that prevailing conditions and key indicators were extremely favourable for a cut.<\/p>\n\n\n\n

Consumer inflation for August came in much cooler than expected at 3.3%, the rand has been resilient and even strengthened this week against the dollar, and the US Fed\u2014which typically strongly indicates local moves\u2014cut its rates by 25 basis points.<\/p>\n\n\n\n

Despite this, the MPC factored in a much longer-view of local market conditions, flagging risks to inflation in the coming months from international uncertainty and dysfunctional administered prices (like Eskom tariff hikes).<\/p>\n\n\n\n

There is also the question of the new (yet to be confirmed) inflation target of 3%, which changes things quite significantly.<\/p>\n\n\n\n

According to the Bureau for Economic Research (BER), the outcome of the MPC meeting was in line with market expectations, where two-thirds of economists expected a hold on rates.<\/p>\n\n\n\n

Incidentally, two-thirds of the MPC voted for a hold, so it could be seen as an exact match.<\/p>\n\n\n\n

But even though the September outcome yielded no movement in rates, it does not mean that rate cuts are off the table.<\/p>\n\n\n\n

The SARB itself said that it opted to hold rates so that it could better digest the previous two rate cuts and see how it impacts the markets and economy.<\/p>\n\n\n\n

The property sector has also seen it as a “pause” in the rate-cutting cycle, not the end, with further cuts still expected.<\/p>\n\n\n\n

Rate cuts still coming<\/h2>\n\n\n\n
\"\"<\/a>
Nedbank chief economist, Nicky Weimar<\/figcaption><\/figure>\n\n\n\n

Ahead of the SARB decisions, Invested chief economist Annabel Bishop\u2014one of the more bullish commentators on rates\u2014said that a 25 basis point cut would be coming in 2025.<\/p>\n\n\n\n

If not in September, then in November, she said, adding that a cut is urgently needed as the current levels are restrictive and demand is incredibly weak.<\/p>\n\n\n\n

The SARB’s own quarterly projection model (QPM) still points to another 25 basis point cut this year\u2014and with only one meeting left, in November, that looks to be it.<\/p>\n\n\n\n

Notably, the QPM also factors in a further 50 to 75 basis point cuts in 2026.<\/p>\n\n\n\n

According to Nedbank chief economist, Nicky Weimar, everything will hinge on inflation and how the SARB and South Africa adapt to the new target, whenever it is confirmed.<\/p>\n\n\n\n

The central bank forecasts a slight upturn in inflation over the near term. Headline inflation peaks at a fractionally higher 4% in Q4 2025, then gradually recedes to 3.2% by the end of next year and down to 3% by the end of 2027.<\/p>\n\n\n\n

Weimar said that the SARB will likely look through any peaks in inflation\u2014taking the longer-term view\u2014and keep interest rates on hold.<\/p>\n\n\n\n

Nedbank’s own inflation forecast reflects a slightly more significant and prolonged rise in inflation than that of the SARB, but still sees the upturn as “modest and fleeting”. <\/p>\n\n\n\n

If South Africa’s good news streak continues\u2014with inflation being benign, the rand strenthening and the Fed continuing its cutting cycle\u2014then it is more likely that more rate cuts will come.<\/p>\n\n\n\n

“If these trends persist, a stronger rand, falling maize prices, and subdued fuel prices will dampen the impact of a low base, higher electricity tariffs and rising meat prices on inflation\u2014leading to a shorter and shallower inflation cycle than we currently anticipate,” Weimar said.<\/p>\n\n\n\n

“Under these circumstances, there could be space for another rate cut in the near term.”<\/p>\n","protected":false},"excerpt":{"rendered":"

The SARB’s decision to keep rates on hold surprised and disappointed many, but it does not mean that the cutting cycle is at an end.<\/p>\n","protected":false},"author":10,"featured_media":826027,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[2922,3619],"class_list":["post-837934","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-interest-rates","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=837934"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837934\/revisions"}],"predecessor-version":[{"id":837936,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837934\/revisions\/837936"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/826027"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=837934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=837934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=837934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}