The South African Reserve Bank has cut the interest rate by 25 basis points to 8% after the countrys headline inflation fell to its lowest levels in three years. It is the first rate cut since 2020.
The bank has kept the rate unchanged at 8.25% since May 2023.
This decision is consistent with projections of lower inflationary pressures in the medium term, said Lesetja Kganyago, governor of South African Reserve Bank.
South Africa s inflation slowed to 4.4% in August, down from Julys figure of 4.6%, after a decrease in transport prices and utility rates. It is the lowest figure since April 2021.
With the rate cut, the Reserve Bank looks to inject more money into Africas most industrialised economy and drive growth momentum which has been stoked by positive sentiments towards the countrys government of national unity (GNU) and improved electricity supply. Despite the improvement, South Africas economy only grew by 0.4% in H2 2024, making the case for a need to boost growth by cutting the lending rate.
