The South African Reserve Bank (SARB) extended its longest easing cycle since 2019 with a 0.25% cut in the benchmark interest rate to 7% on Thursday, as the country braces for the economic impact of looming US trade tariffs.
Governor Lesetja Kganyago announced the decision at a press briefing on Thursday, just one day before the deadline set by US President Donald Trump for nations to reach bilateral trade deals or face steep tariffs on exports to the US.
The SARB’s Monetary Policy Committee (MPC), consisting of six members, were unanimous in making the decision.
Tariffs and Economic Growth Concerns
The rate cut comes amid mounting concerns over the potential economic fallout from Trump’s trade deadline, which could impose a 30% tariff on South African exports to the US.
In a worst-case scenario, the SARB has estimated that such tariffs could reduce South Africa’s GDP growth by as much as 0.6% and increase inflation by 0.4 percentage points.
Kganyago has also warned that up to 100 000 jobs could be lost in key industries such as agriculture and automotive, which are particularly vulnerable to global trade disruptions.
The SARB’s decision to lower rates is seen as an effort to stimulate growth in light of South Africa’s sluggish economy.
