The South African Reserve Bank (SARB) is widely expected to keep interest rates on hold at its upcoming policy meeting this Thursday, 31 July, but market watchers say a rate cut remains on the table as economic uncertainty clouds the outlook.
Economists are split on the likely direction of the central bank’s next move, with some forecasting a cautious pause, and others eyeing a potential 25 basis point cut.
The decision will come amid global market volatility, driven largely by the pending introduction of 30% US tariffs on South African exports, set to take effect on 1 August.
A split in forecasts
Economists at FNB and Investec believe that the SARB’s Monetary Policy Committee (MPC) will adopt a wait-and-see approach, likely opting for a hold in July, with a rate cut delayed until September.
“The uncertainty around the incoming Trump tariffs, combined with global economic jitters, will likely keep the SARB cautious for now,” FNB noted.
In contrast, analysts from Nedbank and Bank of America argue that current economic conditions – particularly low inflation and muted price pressures – give the central bank enough room to act now.
“With inflation firmly at the lower end of the SARB’s 3% to 6% target band, and no strong signs of upward pressure, we believe a cut is warranted,” Bank of America said in a research note.
Recent SARB moves and market context
The MPC has already cut rates by 100 basis points since the end of 2024, with 25 basis point cuts delivered in January and May, following two similar cuts in late 2024.
However, in March, the SARB opted to hold, citing rising global risks and domestic political uncertainty around the 2025 Budget.
That decision signaled the bank’s willingness to prioritise stability over stimulus, particularly in volatile environments.
July’s vote is expected to be tight, with the MPC’s data-driven approach tested by shifting global dynamics.
The pending “Liberation Day” tariffs from the Trump administration – announced in April – have sent shockwaves through global trade, affecting forecasts and investor sentiment.
Delicate balancing act
Though headline inflation has remained well below the SARB’s 4.5% midpoint target, South Africa continues to face a higher risk premium, particularly in uncertain markets.
Historically, the MPC has moved slowly in cutting rates, favoring a more conservative stance to protect the rand and anchor investor confidence.
If the SARB does cut rates on Thursday, it would mark the third cut in eight months, further easing monetary conditions in a weak domestic economy.
But if the committee holds, the door will remain open for further easing later in the year, assuming global volatility subsides.
What’s next?
All eyes will be on the MPC’s statement and vote breakdown, which will provide deeper insight into how policymakers are weighing the competing pressures of domestic data and global risks.
With the Trump tariffs set to begin just one day after the decision, South Africa’s monetary policy path remains uncertain – at least for now.
Who are the SARB’s MPC?
The South African Reserve Bank’s monetary policy committee meets every second month to announce changes – if any – to the country’s repo and prime lending rates.
The meetings in 2025 are scheduled to take place in January, March, May, July, September and November – and always on a Thursday at 15:00.
Currently, the committee comprises of six people, with Lesetja Kganyago holding the position of governor of the SARB – and the deciding vote if necessary.
The repo rate currently stands at 7.25% while the prime lending rate is 10.75%.
| Month | Date | Outcome |
| January | 30 January | 25 basis point cut |
| March | 20 March | No change |
| May | 29 May | 25 basis point cut |
| July | 31 July | ? |
| September | 18 September | |
| November | 20 November |
Monthly bond repayment table
The table below shows the current monthly bond repayments on various bond values over a 20-year period assuming no deposit and repayments at prime.
| Bond | Repayments |
| R750 000 | R7 614 |
| R800 000 | R8 122 |
| R850 000 | R8 629 |
| R900 000 | R9 137 |
| R950 000 | R9 645 |
| R1 000 000 | R10 152 |
| R1 500 000 | R15 228 |
| R2 000 000 | R20 305 |
| R2 500 000 | R25 381 |
| R3 000 000 | R30 457 |
| R3 500 000 | R35 533 |
| R4 000 000 | R40 609 |
| R4 500 000 | R45 685 |
| R5 000 000 | R50 761 |
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