South Africa Interest Rate

The South African Reserve Bank unanimously reduced its key interest rate by 25 basis points to 7% on July 31, 2025, the lowest level since November 2022. The cut was widely anticipated amid concerns over a new US tariff regime threatening the already fragile economy. Policymakers emphasized ongoing global uncertainty, noting that many countries have yet to finalize trade agreements before the US tariff deadline. They also observed a stronger rand and more moderate inflation expectations, with June’s CPI showing headline inflation at 3% and core inflation at 2.9%, both near the lower bound of the target range. Inflation is expected to rise modestly to 3.3% this year before stabilizing at 3% in 2027. Meanwhile, the economy’s outlook remains subdued due to persistent supply-side challenges, particularly in logistics. Consequently, growth forecasts were revised down to 0.9% in 2025 (from 1.1% previously) and 1.3% in 2026 (from 1.5%), but raised to 2% in 2027 (from 1.8%).