The South African Reserve Bank has cut its benchmark interest rate by 25 basis points to 7.25% after inflation fell below the bank’s target range for a second month in a row.
The decision, announced on Thursday, followed headline consumer inflation eased to 2.8% year-on-year in April, well below the central bank’s 3% to 6% target. With inflationary pressures easing, the Monetary Policy Committee (MPC) voted to cut rates in a closely contested vote: five members backed a 25 basis point cut, while one advocated a deeper 50 basis point cut.
Economists had expected a close call, noting the MPC’s typically cautious stance. The interest rate was previously held steady at 7.50% at its March meeting amid concerns over global trade tensions and domestic financial uncertainty.
Some of those risks have since receded. Former US President Donald Trump halted proposed reciprocal tariffs targeting South Africa, while the country’s ruling coalition reached a deal on budget issues, easing some of the fiscal concerns previously flagged.
The decision marks a policy shift as South Africa’s central bank responds to improving inflation dynamics and a more stable economic outlook.