Latest repo rate cut provides much-needed relief for SA consumers

SOUTH Africans were given some relief ahead of the festive season that is about to kick off after the South African Reserve Bank dropped the repurchase rate for the country by 25 basis points (BPS), taking it from 7.00% to 6.75% per annum

- ASHLEY LECHMAN

This translates to the prime lending rate in South Africa decreasing from 10.50% to 10.25%.

This comes after the SARB’s Monetary Policy Committee (MPC) met on Thursday, with consumer inflation rising to its highest level in more than a year.

The governor said that the MPC’s decision was unanimous. “Members agreed there was scope now to make the policy stance less restrictive, in the context of an improved inflation outlook,” SARB governor Lesetja Kganyago said on Thursday.

Kganyago highlighted a global economic context defined by uncertainty and varying inflationary pressures, noting that while inflation stabilised in the Euro area, deflation risks loom over China and inflation spikes persist in the UK, Japan, and the United States. “In emerging markets, by contrast, inflation has eased. In South Africa, growth is steadier than last year, with a revised growth forecast of 1.3% for 2025,” he remarked.

Frank Blackmore, lead Economist at KPMG South Africa told Business Report that there was an array of data that backed the SARB’s move to cut the repo rate.

“A more benign inflationary environment for South Africa on the back of an improved, strengthening rand, oil prices that remain at lower levels, as well as a sovereign debt upgrade,” he said.