Interest rates have peaked, with the SARB’s next move almost surely a rate cut. This is unlikely to be immediate, however, with interest rates expected to be kept stable for a while as inflationary risks dissipate.

ETM’s view for the SARB’s interest rate outlook is similar to both the market’s and the SARB’s own projections. ETM expects the SARB to reduce rates three times this year, each time by 25bps.

This rate-cut cycle will likely be less aggressive than in the pandemic or the subsequent monetary tightening that began in 2022, reflecting SA’s weaker risk profile that needs to be counterbalanced with higher rates.