The SA Reserve Bank will likely lower interest rates by 25 basis points (bps) on Thursday, despite a larger-than-expected overnight move by the Federal Reserve as it turns the screws on inflation.

Almost all of the 24 economists surveyed by Bloomberg expect Governor Lesetja Kganyago to reduce the rate from a 15-year high to 8% when he announces the decision after 15:00 at a press briefing north of Johannesburg. It will be the SARB’s first easing since the pandemic in 2020.

A 50 basis-point cut by the Fed isn’t going to change that, according to economists at Rand Merchant Bank, who saw the six-member monetary policy committee constrained by the narrow gap between the US and South Africa’s real — or inflation-adjusted — rates of interest.

"We find this to be improbable," Keabetswe Mojapelo and Manqoba Madinane said in a note in which they reiterated their view of a quarter-point reduction. "The SARB has highlighted that real rates in South Africa are already low and do not offer the same buffer as in other emerging markets, limiting their capacity for aggressive cuts."

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