South Africa’s first interest-rate cut since 2020 quickly divided economists over how much further it will go after making a cautious 25 basis point start to the easing cycle, despite the Federal Reserve going twice as big the day before.
Rand strength, softer oil prices and slowing inflation, which has dipped below the midpoint of the reserve bank’s 3% to 6% target range, was enough to convince the monetary policy committee to reduce the benchmark rate from a 15-year high to 8%.
Goldman Sachs sees the central bank lowering its policy benchmark a further 150 basis points, but others only expect a shallow adjustment with at most two more quarter-point moves.
Governor Lesetja Kganyago said that a half-point cut, as well as leaving policy on hold, had also been discussed and that consensus yielding a unanimous vote was "ultimately" achieved, suggesting a spirited debate among the six-member MPC.
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