Inflation: Headline CPI ticked up to 3.2% y/y in January, from 3.0% y/y in December 2024. Despite the CPI uptick, inflation remains within the SARB’s target range and well below the 4.5% mid-point.
Repo rate: The SARB cut rates 25bp at the third consecutive meeting in January to take the repo rate down to 7.50%. Between now and the end of 2025, the SARB may cut one more time, with investors happy to adopt a wait-and-see approach. A volatile ZAR could undermine the SARB’s inflation-fighting efforts and ensure a more conservative monetary policy stance through the months ahead. Therefore, given recent international developments, it is prudent for the SARB to be cautious.
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