South Africa’s Second Central Bank Rate Cut Size of 25 Basis Points Matched Expectations – Currency Thoughts

South Africa’s Second Central Bank Rate Cut Size of 25 Basis Points Matched Expectations

November 21, 2024

The South African Reserve Bank policy interest rate was cut today to a 19-month low of 7.75%. A peak of 8.25% was maintained for 16 months from May 2023 until an initial reduction of 25 basis points at the previous policy review in September. Consumer price inflation in South Africa has decelerated from 7.8% in July 2022 to 2.8% last month. Core inflation printed last month at 3.9%, and SARB officials project inflation in 2025-26 hovering around 4-4.6%, which is close to the middle of the 3-6% target. In the previous cycle, the central bank interest rate got as low as 3.5% in July 2020-November 2021, but a lower-than-normal bottom was necessitated in South Africa as elsewhere due to the peculiarities of a world pandemic. This cycle will see the rate likely bottom above the last one’s trough.

Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: South Africa Reserve Bank

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on Thursday, November 21st, 2024 at 8:26 am and is filed under Central Bank Watch.
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