Reserve Bank is Set to Keep Interest Rates Steady This Week

Energy Minister Kgosientsho Ramokgopa. (Creamer Media’s Engineering News)

by Kelebogile Matlou

The South African Reserve Bank’s Monetary Policy Committee (MPC) is expected to maintain interest rates unchanged when it announces its decision on Thursday of this week. Analysts believe that even though inflation is expected to fall, the bank would likely wait before dropping rates further, with a final reduction predicted later this year.

At its most recent meeting, the MPC cut the repo rate by 0.25% to 7%, bringing the prime lending rate to 10.5%. The Bureau of Economic Research recently surveyed economists, entrepreneurs, and unionists, and they estimate inflation to average 3.8% in 2025 and 4.2% in 2026.

Independent economist Elize Kruger said reduced inflation is encouraging, but she expects rates to remain unchanged this week. “Inflation is showing signs of being moderate, which is positive. However, I believe interest rates will remain unchanged for now,” she said

The Reserve Bank has lowered rates by 1.25% since the rate-cutting cycle began in September of last year, lowering the repo rate from 8.25% to 7%. According to chief economist Dawie Roodt, the bank may wait a few months to control inflation expectations before lowering interest rates any more.

Meanwhile, Energy Minister Kgosientsho Ramokgopa told Parliament that his department would shortly publish strategies to address rising electricity tariffs. He said the cost of power is too high, affecting household earnings and the economy’s competitiveness. Ramokgopa vowed to keep Parliament and the public informed on initiatives to keep electricity costs under control.