Experts tip 25bps rate cut as Sarb readies for final monetary policy meeting of 2025

ECONOMISTS and analysts believe a 25 basis point interest rate cut is likely when the South African Reserve Bank's (Sarb) Monetary Policy Committee (MPC) meets next week

- YOGASHEN PILLAY

This comes as Finance Minister Enoch Godongwana on Wednesday confirmed that government had officially lowered the inflation target from the previous 3-6% range to a single-point target of 3%, in line with global best practice.

Neil Roets, CEO of Debt Rescue, on Thursday said the new target represented a "significant structural shift" that could improve household financial stability over time.

"We at Debt Rescue see this as a significant structural shift that has the potential to improve long-term financial stability for households. A lower target aligns South Africa with global best practice and, over time, should translate into lower borrowing costs and stronger consumer buying power."

Roets said the move was positive for consumers who have endured years of high living costs but urged caution on near-term rate expectations.

"At the same time, we remain cautiously optimistic about what this means for interest rates next week. Market expectations still suggest a high likelihood of a 25 basis point cut, and the South African Reserve Bank has repeatedly stated that lower inflation should support lower interest rates in the future."