South African Reserve Bank Cuts Repo Rate by 25 Basis Points to 7.75% in Second Consecutive Reduction

The South African Reserve Bank cut its benchmark repo rate by 25 basis points to 7.75% on 21 November 2024, extending a back-to-back easing sequence that began at the preceding meeting. The Monetary Policy Committee pointed to continued disinflation as the principal driver, with headline inflation having fallen to 2.8%, below the bank's 3–6% target range.

INFLATION AND POLICY STANCE

The SARB's Monetary Policy Committee has consistently identified the 4.5% midpoint of its inflation target as the anchor for policy decisions. Governor Lesetja Kganyago said the committee agreed that reducing the level of policy restrictiveness was still consistent with achieving the inflation target. Lower energy costs and moderated food price growth have been among the factors contributing to the improved inflation outlook.

LENDING RATES

South Africa's prime lending rate, set conventionally at 350 basis points above the repo rate, will fall to 11.25% following the adjustment. The reduction lowers the cost of mortgage finance, vehicle finance and business credit across the economy. The cumulative effect of two consecutive cuts represents a combined 50 basis points of relief for variable-rate borrowers.