By Colleen Goko and Kopano Gumbi
South Africa’s central bank believes it has reached a “neutral zone” on interest rates after its latest cut and now needs government reforms to spark stronger economic growth, Reserve Bank officials said on Thursday.
Africa’s most industrialized economy has grown by less than 1% annually on average over the last decade due to a combination of structural challenges, including high unemployment and energy supply issues as well as moderate global growth.
The Reserve Bank cut the benchmark interest rate by 25 basis points to 7.25%. It has taken it down from 8.25%, with the first cut in September of 2024. Deputy governor Rashad Cassim said borrowing costs were no longer seen as “restrictive” for the economy.
“We are now more or less in this neutral zone, recognising of course that there are imperfections in how you measure these things,” Cassim said, referring to the level of interest rates.
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