South Africa Reserve Bank releases interest rates

South Africa’s Reserve Bank (SARB) will today release its interest rate decision following yesterday’s general elections.

After marginally avoiding a recession last year, Pretoria’s economy showed a slight bounce back during the first quarter of 2024. Despite the slight growth however, the government is faced with a significantly high unemployment problem—especially amongst the young population—accompanied by increasing levels of poverty. In today’s interest rate decision, which will be released shortly after a brief monetary policy meeting, analyst forecast that the SARB will most likely hold interest rate at its benchmark level of 8.25%.

Moving forward, expect the rates to be cut down by approximately 25 to 50 points during the third quarter of 2024. This is mainly because inflation is expected to fall into the SARB’s target range of 3-6%, making it unjustifiable for the SARB to maintain high interest rates. Unlike some of South Africa’s neighboring states, which are troubled with high inflation, Pretoria will most likely remain in its target range for the next two years. This could push SARB to further lower its inflation target rate to below 3% during the short-to medium-term.