South Africa Interest Rate

The South African Reserve Bank reduced its key interest rate by 25 basis points to 7.75% on November 21st, 2024, as anticipated, bringing borrowing costs to their lowest level since April 2023. Policymakers stressed that while inflation is well-contained in the short term, the medium-term outlook carries significant uncertainties and potential for upside risks. The Bank noted that headline inflation dipped below its target range of 3%-6% at 2.8% in October, reflecting a stronger exchange rate and lower oil prices compared to last year, with these temporary supply shocks expected to keep inflation below 4% until mid-2025. The 2024 inflation forecast was revised down to 4.5% from 4.6%, while the 2025 estimate remained unchanged at 4%, and the 2026 projection was raised to 4.6% from 4.4% due to higher electricity prices. Regarding economic growth, the central bank kept its 2024 forecast at 1.1%, increased its 2025 projection to 1.7% from 1.6%, and held its 2026 forecast steady at 1.8%.