Reserve Bank slashes repo rate to 7% on cooling inflation
It comes into effect from August 1.
This decision was announced by SARB Governor Lesetja Kganyago during a media briefing on July 31. It follows a unanimous vote by the bank's Monetary Policy Committee (MPC).
Kganyago said the rate cut reflects a strengthening rand, improved inflation expectations, and stable economic indicators.
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'The June Consumer Price Index print showed headline inflation at 3% and core at 2.9%, still at the bottom of our target range,' he noted.
'While food inflation has picked up – mainly due to meat prices – and fuel prices are falling at a slower pace, we still forecast inflation to average 3.3% for the year.'
The governor confirmed that inflation is expected to stabilise around the target midpoint in the coming period, with risks to the outlook now seen as balanced.
Growth expectations revised
Economic performance in early 2025 has been mixed. Although growth in the first quarter was reported at just 0.1%, in line with SARB expectations, downward revisions to previous GDP figures and possible higher US tariffs have prompted the bank to revise its 2025 growth forecast downwards.
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'Underlying growth remains weak due to ongoing supply-side constraints, especially in logistics. Business and consumer confidence also dipped during the first half of the year,' Kganyago said.
Despite this, the SARB expects gradual improvements driven by ongoing structural reforms.
Shift in inflation targeting
Kganyago announced a shift in the SARB's inflation targeting framework, with the bank now preferring inflation to settle at 3%, the bottom of the existing 3–6% target range.
'This strategic shift has helped strengthen the rand and reduce long-term borrowing costs,' he said.
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'We will now use forecasts anchored at 3% inflation in future MPC meetings and continue working with National Treasury to achieve lasting low inflation.'
Kganyago added that reduced inflation expectations would expand monetary policy space and enhance the resilience of the policy framework.
The move reflects the SARB's longer-term goal of reducing uncertainty and entrenching price stability.
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IOL News
10 hours ago
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SA Reserve Bank rate cut offers relief to consumers
South African Reserve Bank governor Lesetja Kganyago. Image: Thobile Mathonsi / Independent Newspapers South African consumers were given some reprieve this past week as the South African Reserve Bank lowered interest rates in the country. Sarb Governor Governor Lesetja Kganyago announced that the central bank's Monetary Policy Committee (MPC) voted to cut the repurchase rate (repo rate) by 25 basis points (BPS). This means the repo rate will decrease from 7.25% to 7%, effectively taking the prime lending rate to the country to 10.50% from 10.75%. Kganyago said that the decision was unanimous by the MPC members. "For policy, as we showed last time, lower inflation allows for lower interest rates. In our Quarterly Projection Model, for a 4.5% objective, rates bottom out around 7%. By contrast, the forecast for a 3% objective has roughly five more cuts, over the medium term, taking interest rates slightly below 6%. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ "Although there is some increase in food price inflation, headline inflation is seen by the bank to come in at around 3.3% for 2025. 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IOL News
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Words on wealth: why are interest rates still high when inflation is so low?
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IOL News
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Finance Minister dismisses speculation on 3% inflation target
Finance Minister Enoch Godongwana has dismissed speculation about a formal shift to a 3% inflation target, affirming that any changes will follow due consultation with the Reserve Bank, Cabinet, and other stakeholders. Finance Minister Enoch Godongwana has firmly dismissed speculation that government will formally adopt a 3% inflation target, following a recent announcement by the South African Reserve Bank's (SARB) Monetary Policy Committee (MPC). The SARB's MPC had indicated a preference to target inflation at 3% going forward, raising expectations that the Ministry of Finance would officially endorse this shift during the upcoming Medium-Term Budget Policy Statement (MTBPS). However, Godongwana made it clear that "Minister Godongwana has no plans to do this."
