South Africa's Central Bank Cuts Rates for First Time in Four Years

BREAKING NEWSSeptember 19, 2024 at 1:22 PM UTC

TLDR

South Africa's central bank reduces benchmark interest rate by 25 basis points to 8% in response to global easing expectations.
Governor Lesetja Kganyago announces the rate cut during a press briefing, aligning with most economists' predictions.
Inflation in South Africa has moderated below the central bank's target range of 4.5%, allowing policymakers to commence easing after keeping rates high for 15 years.

South Africa’s central bank lowered its benchmark interest rate by 25 basis points to 8%, marking the first rate cut in over four years. This move follows the U.S. Federal Reserve's 50 basis-point reduction the previous day and reflects expectations of further global financial easing.

Governor Lesetja Kganyago announced the decision during a press briefing on Thursday. It aligned with the predictions of most economists. Only one analyst had forecast a larger 50 basis-point cut.

The cut comes as inflation in South Africa has moderated, falling below the midpoint of the central bank’s target range of 4.5%. This gives policymakers room to begin easing after maintaining rates at a 15-year high.

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Key Takeaways

The South African Reserve Bank’s 25 basis-point cut reflects growing momentum for global monetary easing, following the Fed’s recent move. With inflation cooling and a stable rand, South Africa joins other central banks in reducing borrowing costs. This shift may bolster investor confidence in emerging markets, leading to more favorable financial conditions and capital inflows. Further rate cuts could follow as global financial conditions continue to ease, benefiting South Africa's economic growth and asset markets.

South Africa

Economy

Interest Rates

Inflation

SARB

US Fed