The South African Reserve Bank lowered its key interest rate by 25 basis points to 7.25% on Thursday, citing subdued inflation.
This marks a shift in monetary policy after inflation fell below the bank’s 3–6% target range for the second straight month.
Headline consumer inflation registered at 2.8% in April, reinforcing confidence that price pressures remain under control in Africa’s most industrialised economy.
The bank’s Monetary Policy Committee (MPC) made the decision in a split vote, with five members backing the quarter-point cut and one urging a deeper 50 basis point reduction.
Economists had forecast a finely balanced call, noting the MPC’s reputation for prudence in uncertain global conditions.
The bank had kept rates steady at 7.50% in March, pointing to risks tied to U.S. trade tensions and domestic fiscal uncertainty.
However, those fears have since softened after U.S. President Donald Trump suspended his threatened reciprocal tariffs against South Africa and others.
Domestically, South Africa’s ruling coalition also reached consensus on budgetary reforms, calming markets and bolstering the bank’s confidence.
Analysts now watch for further signals from the Reserve Bank on whether more easing may follow in the coming months.
The rate cut is expected to provide modest relief to consumers and businesses, though structural challenges still weigh heavily on the country’s economic prospects.
