South African Reserve Bank Cuts Repo Rate to 7.50% in Third Consecutive Reduction

The South African Reserve Bank reduced its benchmark repo rate by 25 basis points to 7.50% on 30 January 2025, completing a third consecutive cut and delivering a cumulative 75 basis points of easing since the Monetary Policy Committee began its current loosening cycle in September 2024. The prime lending rate, to which the majority of variable-rate mortgages and business loans are linked, fell correspondingly to 11.00%.

The decision, backed by four of the six MPC members with two preferring to hold, was in line with market consensus and reflected the MPC's assessment that moderating domestic inflation and well-anchored inflation expectations had created the conditions for a continued, measured withdrawal of monetary restriction. Governor Lesetja Kganyago has framed each cut in the current cycle as a calibrated step rather than a signal of a more aggressive easing path, consistently emphasising that future decisions remain data-dependent and that the committee is not operating on a predetermined schedule.

EASING CYCLE SINCE SEPTEMBER 2024

The SARB's September 2024 decision to begin cutting rates ended a period of restrictive policy. The central bank had held the repo rate at 8.25% for an extended period before the easing cycle began.

At 7.50%, the repo rate remains above the pre-pandemic range of approximately 6.25% to 6.75% that prevailed in the years before the COVID-19 shock. The committee has not specified a terminal rate or an endpoint for the easing cycle; the SARB's inflation target band is 3% to 6%.

South Africa's consumer price inflation has decelerated from its 2022 peak above 7%. The MPC nonetheless described the medium-term inflation outlook as more uncertain than usual, with material risks from the external environment, and Governor Kganyago said the bank must move with caution.