{"id":846107,"date":"2025-12-28T13:00:00","date_gmt":"2025-12-28T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=846107"},"modified":"2025-12-28T09:10:59","modified_gmt":"2025-12-28T07:10:59","slug":"what-to-expect-for-interest-rate-cuts-in-january-2026","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/846107\/what-to-expect-for-interest-rate-cuts-in-january-2026\/","title":{"rendered":"What to expect for interest rate cuts in January 2026"},"content":{"rendered":"\n

South Africa’s rate-cutting cycle is still in full swing, with economists anticipating another 50 basis points of cuts in 2026 and one more cut to follow in 2027.<\/p>\n\n\n\n

The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) kicked off a rate-cutting cycle in September 2024, when it cut rates by 25 basis points.<\/p>\n\n\n\n

The MPC\u2019s decision at the time marked the first time since May 2023 that the central bank had changed rates.<\/p>\n\n\n\n

Since the start of the cycle, the MPC has delivered a cumulative 150 basis points of cuts, dropping the repo rate from 8.25% before the cuts to 6.75% today.<\/p>\n\n\n\n

The latest interest rate move was in November, where the MPC voted unanimously to cut interest rates by 25 bps, taking the repo rate to 6.75%, and the prime lending rate to 10.25%.<\/p>\n\n\n\n

According to the SARB’s own forward projection model, South Africa still has room for more interest rate cuts in the new year.<\/p>\n\n\n\n

Economists and analysts agree, although they are not all in agreement regarding the pace of the cuts.<\/p>\n\n\n\n

Some believe the cuts will be front-loaded in 2026 to alleviate the market tension that has built up over the years, then move on to a long period of the rate being held steady as the SARB moves toward its 3% inflation target.<\/p>\n\n\n\n

Others believe the rate cuts will be on hold following the November move, only being cut further once the 3% target has settled.<\/p>\n\n\n\n

According to chief investment strategist at Symmetry, Izak Odendaal, the Reserve Bank’s quarterly projection model (QPM) gives a strong indication that, whatever the pace, South Africa has room for 75bps of cuts left in it.<\/p>\n\n\n\n

The QPM is a forecast of where the repo rate should be<\/em>, given all the other economic assumptions made by the central bank. <\/p>\n\n\n\n

The QPM points to rates declining to 6% by 2027. <\/p>\n\n\n\n

“The Bank always reiterates that the QPM is merely a guide, and that decisions are taken on a meeting-by-meeting basis, but it does indicate what a reasonable path for interest rates looks like,” Odendaal said.<\/p>\n\n\n\n

Given that pathway, the MPC is expected to proceed gradually, given the uncertain environment.<\/p>\n\n\n\n

This has analysts forecasting a pause in rate cuts in January 2026, with another 25bps cut to follow in March. The SARB could be done with cuts for the year by mid-2026.<\/p>\n\n\n\n

Eyes on the Fed<\/h2>\n\n\n\n
\"\"<\/a>
Izak Odendaal<\/figcaption><\/figure>\n\n\n\n

One of the key factors that always comes up in projections is the rate-cutting path of the United States Federal Reserve.<\/p>\n\n\n\n

The Fed and its direction are key, as they influence markets and the dollar, as well as risk-on or risk-off sentiment in global markets.<\/p>\n\n\n\n

The difference between the US interest rate and the SARB interest rate\u2014the interest rate differential\u2014also plays a key role in the rand’s strength and willingness for investors to jump in.<\/p>\n\n\n\n

Because of this, the SARB’s moves generally follow what is happening in this key market.<\/p>\n\n\n\n

“Though it doesn\u2019t always follow the US Fed, it keeps a close eye on it. In fact, the latest decision was proof that the MPC does not always have to wait for the Fed,” Odendaal noted.<\/p>\n\n\n\n

In the November MPC decision, the SARB cut rates ahead of the US Fed’s decision to hold.<\/p>\n\n\n\n

“Ultimately, global markets determine how freely emerging market central banks can act,” Odendaal noted.<\/p>\n\n\n\n

“If the Fed turns hawkish at its upcoming meetings, not only pausing the cuts but also changing the outlook, it could lead to a stronger dollar and general market anxiety.”<\/p>\n\n\n\n

The strategist noted that this would close off space for the Reserve Bank and other central banks to ease.<\/p>\n\n\n\n

However, if the Fed continues to gradually ease, the Reserve Bank will have more confidence to do the same. <\/p>\n\n\n\n

“Therefore, if the dollar remains the dominant global currency, we need to keep close track of American politics and policy, whether liking it or not,” he said.<\/p>\n\n\n\n

South Africa’s interest rate-cutting cycle<\/h2>\n\n\n\n
Meeting<\/th>Expected move<\/th>Repo Rate<\/th>Prime Lending<\/th><\/tr><\/thead>
September 2024<\/td>-25bp<\/td>8.00%<\/td>11.50%<\/td><\/tr>
November 2024<\/td>-25bp<\/td>7.75%<\/td>11.25%<\/td><\/tr>
January 2025<\/td>-25bp<\/td>7.50%<\/td>11.00%<\/td><\/tr>
March 2025<\/td>Hold<\/td>7.50%<\/td>11.00%<\/td><\/tr>
May 2025<\/td>-25bp<\/td>7.25%<\/td>10.75%<\/td><\/tr>
July 2025<\/td>-25bp<\/td>7.00%<\/td>10.50%<\/td><\/tr>
September 2025<\/td>Hold<\/td>7.00%<\/td>10.50%<\/td><\/tr>
November 2025<\/td>-25bp<\/td>6.75%<\/td>10.25%<\/td><\/tr>
January 2026<\/td>Hold<\/td>6.75%<\/td>10.25%<\/td><\/tr>
March 2026<\/td>-25bp<\/strong><\/td>6.50%<\/strong><\/td>10.00%<\/td><\/tr>
May 2026<\/td>Hold<\/td>6.50%<\/td>10.00%<\/td><\/tr>
July 2026<\/td>-25bp<\/strong><\/td>6.25%<\/strong><\/td>9.75%<\/strong><\/td><\/tr>
September 2026<\/td>Hold<\/td>6.25%<\/td>9.75%<\/td><\/tr>
November 2026<\/td>Hold<\/td>6.25%<\/td>9.75%<\/td><\/tr>
January 2027<\/td>Hold<\/td>6.25%<\/td>9.75%<\/td><\/tr>
March 2027<\/td>-25bp<\/strong><\/td>6.00%<\/strong><\/td>9.50%<\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

South Africa’s rate cutting cycle is still in full swing with economists anticipating another 50 basis points of cuts in 2026, and one more cut to follow in 2027.<\/p>\n","protected":false},"author":10,"featured_media":656797,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[19941,3619],"class_list":["post-846107","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-izak-odendaal","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/846107","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=846107"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/846107\/revisions"}],"predecessor-version":[{"id":846818,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/846107\/revisions\/846818"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/656797"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=846107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=846107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=846107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}