SA Reserve Bank plays it safe with 25 bps cut

By Tannur Anders, Kopano Gumbi and Alexander Winning

South Africa’s central bank opted for another small cut to its main interest rate on Thursday, stressing a tough global backdrop and uncertain domestic outlook despite inflation falling below its target range for the first time in years.

The decision to lower the repo rate by 25 basis points (bps) to 7.75% was unanimous, with no discussion about a larger 50 bps cut, South African Reserve Bank Governor Lesetja Kganyago told reporters.

Most economists had expected a 25 bps reduction, the same size of cut as in September.

But a small minority thought the SARB would go for a bolder 50 bps cut in the wake of Wednesday data showing annual inflation slowed to 2.8% in October, its lowest level since the peak of the COVID-19 pandemic in mid-2020.

Kganyago stuck to his trademark cautious tone, however, playing up global risks including