The South African Reserve Bank's Monetary Policy Committee (MPC) met in November 2024 and announced another 25 basis point (bp) cut to the repo rate, reducing it from 8.00% to 7.75%. This brings the prime lending rate to 11.25%, marking the second consecutive 25 bp cut following a similar move in September 2024.
The rate cuts were driven by favorable economic conditions, including a sharp drop in inflation forecasts, which are now expected to average 4.6% in 2024 and drop further to 4.0% in 2025. SARB Governor Lesetja Kganyago suggested that inflation may continue to decline, potentially allowing for further rate reductions in the coming months.
These developments are good news for South Africans, particularly homeowners and borrowers, as they will experience slight relief on their monthly debt repayments. However, experts caution that the rate-cutting cycle will likely proceed gradually, with only minor reductions expected in the near term.
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