There was some good news for those looking to enter the property market – as well as those currently paying off bonds – on Thursday when the South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) cut the interest rate.
For the latest finance news, bookmark The South African website’s dedicated section for free-to-read content
As was widely expected, the MPC’s six members cut interest rates by 25 basis points (bps).
“The SARB’s decision to trim interest rates by 25 bps was to be expected, considering South Africa’s still sluggish economic growth. While the repo and primary lending rates may have dropped, stimulating borrowing and investing, it may be perceived as a double-edged sword. Although it lends strength to the rand, the central bank’s decision raises concerns about bond repayments on a short to a long-term basis. Meanwhile, the Federal Reserve’s readiness to cut interest rates, with some economists forecasting further downward rate adjustments throughout 2025, seems to have provided momentum to USDZAR. Traders must continue to exercise caution and closely watch the upcoming key economic releases”, said Terence Hove, Senior Financial Markets Strategist at Exness, a global multi-asset brokerage firm.
Lesetja Kganyago, Governor of the South African Reserve Bank, confirmed in his announcement that the MPC discussed both a 25 basis point and a 50 basis point cut, but ultimately reached consensus on the former.
The repo rate now stands at 8% and the prime lending rate at 11.50%.
The MPC had hiked interest rates by 475 basis points since 2021, despite keeping the rate unchanged for the last seven meetings – until Thursday’s announcement.
That had represented a 15-year high (since 2009) and had several South Africans struggling to finance their debt.
