SARB Cuts Interest Rates By Another 25 Basis Points - Prime Lending Rate Now 11.25%
Earlier this afternoon, the Monetary Policy Committee of the South African Reserve Bank (‘SARB’) convened its sixth and final meeting of 2024. As widely predicted by economic analysts and major financial institutions, SARB elected to lower the repurchase rate (‘repo rate’) from 8% to 7.75%, with effect from tomorrow, 22nd November 2024. Accordingly, the prime lending rate for commercial banks is adjusted to 11.25%.
The adjustment follows the consistent easing of consumer price inflation, which declined from 3.8% in September to 2.8% in October, and is now at a four-year low. Against the backdrop of disinflationary trends, the interest rate cut will provide additional relief to homeowners whose bond repayments increased significantly after SARB raised the repo rate by a cumulative 3.75% beginning in November 2021.
Positively, economists anticipate further interest rate cuts in early 2025, with some forecasting an additional 75-basis point reduction in 2025, resulting in a repo rate of 7% and a prime lending rate of 10.5% by year-end.