South Africa’s central bank cut its main lending rate by 25 basis points to 6.75% on Thursday at the first meeting since its inflation target was lowered, easing concerns that the new target would prevent it from cutting rates.
The decision by members of the bank’s Monetary Policy Committee was unanimous.
“Members agreed there was scope now to make the policy stance less restrictive, in the context of an improved inflation outlook,” Governor Lesetja Kganyago told a news conference.
The bank made small downward revisions to its inflation forecasts for 2025 and 2026.
Economists polled by Reuters had been divided on what Thursday’s policy decision would be.
Some thought the committee would take a cautious stance given its new 3% inflation target, while others thought there was room for a rate cut with inflation only slightly above target (ZACPIY=ECI), opens new tab and within a 1-percentage-point “tolerance band” set
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