South Africa's central bank made its second consecutive interest rate cut on Thursday, indicating that inflation is under control and the economic outlook for both inflation and growth is balanced. The South African Reserve Bank's Monetary Policy Committee, under the leadership of Governor Lesetja Kganyago, reduced the policy rate by 25 basis points, bringing it to 7.75 percent, consistent with economists' forecasts.
This follows a similar reduction of a quarter-point in September. Governor Kganyago noted, "The Committee agreed that lowering the degree of policy restrictiveness remains aligned with our inflation targets. However, the risk outlook necessitates a cautious strategy."
The central bank's forecasts suggest further rate reductions, expecting them to stabilize slightly above 7 percent. The SARB anticipates that temporary supply shocks will maintain inflation below 4 percent until mid-2025, with a gradual rise to 4.6 percent projected from late 2025. The Committee's next policy meeting is set for January 30, 2025.
