South Africa’s move to a lower 3% inflation target may be phased in by the end of 2027, potentially resulting in official interest rates moderating to below 6%, Bank of America said.
“We think moving to 3% is almost certain,” Tatonga Rusike and Mikhail Liluashvili, respectively an economist and strategist at the bank, said in a note.
“The phase-in period could be two years — announced by end-2025, and the target reached by end-2027.”
Under that scenario, the lender sees the benchmark lending rate at 5.75% by the end of 2027.
South Africa’s monetary policy committee is meeting on Thursday to discuss its latest interest-rate stance and is widely expected to reduce borrowing costs by another 25 basis points to 7%.
At its May meeting, the central bank said research showed that lowering the inflation target to 3% would lead to the benchmark declining to 5.79%, compared to its
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