BREAKING NEWSSeptember 19, 2024 at 1:22 PM UTC
TLDR
- South Africa’s central bank cuts its benchmark interest rate by 25 basis points to 8% in response to expectations of global easing.
- Governor Lesetja Kganyago announces the rate cut at a press conference, in line with most economists’ forecasts.
- In South Africa, inflation has fallen below the central bank’s target range of 4.5%, allowing policymakers to begin easing policy after keeping rates high for 15 years.
South Africa’s central bank cut its benchmark interest rate by 25 basis points to 8%, marking the first rate cut in more than four years. The move follows a 50 basis point cut by the US Federal Reserve the day before and reflects expectations of further global financial easing.
Governor Lesetja Kganyago announced the decision at a press conference on Thursday. The move is in line with most economists’ expectations. Only one analyst had predicted a deeper cut of 50 basis points.
The cut comes as inflation in South Africa has moderated, falling below the midpoint of the central bank’s target range of 4.5%. That gives policymakers room to start easing rates after keeping them at their highest level in 15 years.
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Key Takeaways
The South African Reserve Bank’s 25 basis point rate cut reflects the growing momentum for monetary easing globally, following the Fed’s recent decision. With inflation slowing and the rand stable, South Africa is joining other central banks in reducing borrowing costs. This could boost investor confidence in emerging markets, leading to more favourable 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.
