South Africa Interest Rate

The South African Reserve Bank slashed its key interest rate by 25 bps to 8% on September 19, 2024, as expected, following seven consecutive meetings at a 15-year peak of 8.25%. This marks the SARB’s first policy easing since the pandemic in 2020, as price pressures cooled. The annual inflation slowed to 4.4% in August from 4.6% the prior month, dropping below the midpoint of the central bank's preferred target range of 3% to 6%, for the first time in over three years. Policymakers expect this progress to be sustained, with inflation projected to remain below the 4.5% midpoint through the end of the forecast horizon in 2026. Accordingly, inflation projections were lowered, with 2024's forecast cut to 4.6% from 4.9%, the 2025 estimate reduced to 4% from 4.4%, and the 2026 projection trimmed to 4.4% from 4.5%. Concerning economic activity, the SARB maintained its 2024 projection at 1.1%, while revising its 2025 forecast up to 1.6% (from 1.5%) and its 2026 forecast to 1.8% (from 1.7%).