As expected, the SA Reserve Bank’s monetary policy committee (MPC) lowered interest rates by 25 basis points – despite a jumbo cut of 50 basis points in the US overnight.
Following the cut, SA’s repo rate will now be 8%, and the prime rate 11.50%.
The MPC’s decision means the monthly instalment on a new R2-million home loan at the prime rate will be almost R350 cheaper. Since the MPC started hiking rates in 2021, repayments on a R2-million bond surged by R7 000 a month.
SARB Governor Lesetja Kganyago said cooler inflation should be sustained. He said that the MPC expects the repo rate will stabilise "slightly above 7%" next year.
In August, consumer inflation dipped below the SA Reserve Bank's sweet spot of 4.5%. The MPC wanted to see inflation move closer to the 4.5% midpoint of its 3% to 6% target range before it would lower rates. Inflation has cooled in large part due to fuel prices, which have seen large cuts thanks to a soft oil price and a strong rand. More relief is on its way, with large diesel and petrol price reductions expected at the start of October.
