SARB opens the door to rate cuts

The South African Reserve Bank’s decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism on the MPC that inflation is moving towards the 4.5% mid-point of the target and that inflation expectations are falling. This, alongside the fact that two MPC members voted for a cut at today’s meeting, have prompted us to revise our interest rate forecast and we now expect the SARB to embark on an easing cycle at its next meeting in September with a 25bp cut to 8.00% (previously we thought rate cuts would start in early 2025).