BAD news for those in debt hoping for an interest rate cut

A key gauge of South African inflation expectations rose slightly, providing central bankers with another reason to be cautious about lowering borrowing costs when they meet on Thursday this week.

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According to Bloomberg, expectations for average inflation in two years’ time – a measure the central bank’s monetary policy committee uses to inform its decision-making – edged up to 4.7% in the first quarter from 4.6% previously, according to a survey released on Monday by the Stellenbosch-based Bureau for Economic Research.

Expectations for this year fell to 4.3% from 4.5%.

The rise in expectations in two years’ time adds to concern about the impact that US President Donald Trump’s tariff war will have on global inflation.

Leave interest rates on hold

The median estimate of economists surveyed by Bloomberg is for the central bank to leave interest rates on hold at 7.5% on Thursday.

South African Central Bank Governor Lesetja Kganyago warned last month that tariff increases risk the global economy and may reverse the recent cycle of central bank policy easing.

Kganyago said he assesses South African inflation to be creeping up, noting baseline assumptions that show prices rising to the 4.5% midpoint of the Reserve Bank’s 3%-to-6% target range, where it prefers to stabilise expectations.

Statistics South Africa (StatsSA) will release its latest annual inflation data on Wednesday.

According to a median estimate of 15 economists in a Bloomberg survey, the data is expected to show an uptick to 3.4% in February from 3.2% the previous month.

If the MPC did cut rates – as six of the 19 economists surveyed by Bloomberg predict – it would be the fourth such move since the Reserve Bank started its easing cycle in September.

As a reminder, the South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) will meet for the second time in 2025 on Thursday, 20 March.

The MPC will have had just over a week to digest the Budget Speech news and decide what to do with interest rates in the country.

What did the MPC decide in January?

There was some good news for South Africa’s homeowners and those looking to enter the property market for the first time back in January when the MPC decided on a 25 basis point cut which no doubt came as welcome news to all those South Africans in debt.

Kganyago confirmed that the decision was not unanimous and that four MPC members voted for a 25 basis point cut, while the remaining two members preferred rates to have remained unchanged.

The repo rate currently stands at 7.50% while the prime lending rate is 11%.

Who are the SARB?

The South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) meets every second month to announce changes – if any – to the country’s repo and prime lending rates.

The meetings 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.

Monthly bond repayment table

The South African website’s table below shows the current monthly bond repayments on various bond values over a 20-year period assuming no deposit and repayments at prime.

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