South Africa’s Interest Rate Outlook: Top Economists Predict Further Cuts in 2025

South African consumers and businesses could see further relief in 2025 as top economists predict additional interest rate cuts. Following a third consecutive 25 basis point reduction in January, the South African Reserve Bank (SARB) lowered the repo rate to 7.50%, easing pressure after a period of record-high interest rates.

With inflation falling to 3.0% in December 2024—well within SARB’s 3-6% target range—many experts anticipate further monetary policy easing. However, global risks, including potential US trade tariffs, could complicate the outlook.

What Leading Economists Expect for Interest Rates in 2025

Annabel Bishop (Investec): Two 25bp Cuts in 2025

Investec’s Chief Economist, Annabel Bishop, forecasts two additional 25 basis point cuts, likely in July and November. However, she warns that SARB may pause its rate-cutting cycle in the first half of the year due to global economic uncertainties.

Dawie Roodt (Efficient Group): One 25bp Cut, With Risks

Dawie Roodt expects only one 25 basis point cut in 2025 but cautions that US policy decisions, particularly those under former President Donald Trump, could impact SARB’s plans. Potential sanctions or financial restrictions on South Africa could delay further rate reductions.

Goolam Ballim (Standard Bank): One 25bp Cut in March

Standard Bank’s Chief Economist, Goolam Ballim, predicts a single 25 basis point cut at the SARB’s March meeting. He highlights that inflation risks remain due to potential US trade tariffs but believes South Africa’s own “disinflationary impulses” could counteract external pressures.

Johann Els (Old Mutual): Two 25bp Cuts in 2025

Old Mutual’s Chief Economist, Johann Els, also foresees two 25 basis point cuts this year, driven by relatively low inflation levels. He expects inflation to stay below 4.5% for most of the year, creating room for further easing.

Koketso Mano (FNB): 50bp Cuts Expected

FNB Senior Economist, Koketso Mano, shares a similar outlook, forecasting two 25 basis point cuts in 2025. She highlights that a stable inflation outlook should support SARB’s decision to continue easing monetary policy.

What This Means for Consumers and Businesses

If SARB follows through with these predicted rate cuts, consumers could see lower borrowing costs on home loans, car financing, and credit cards. Businesses may also benefit from reduced financing expenses, potentially boosting investment and job creation.

However, global risks, particularly US trade policies and economic uncertainty, could influence SARB’s decisions. The Reserve Bank will likely remain cautious to ensure inflation remains stable while supporting economic growth.

While South African economists largely agree that interest rates will decline further in 2025, the pace and timing of cuts remain uncertain. With inflation currently under control but global risks looming, SARB’s decisions will be closely watched in the coming months.

The next interest rate decision by the SARB’s Monetary Policy Committee is set for March 2025, where the first potential cut of the year could be announced.

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