The SARB delivered its second-consecutive cut at the November MPC meeting. As was the case at the previous meeting, the vote was unanimous for a 25bp reduction to the repo rate.
Since the last MPC meeting global macroeconomic backdrop has become more challenging and has led to an upward shift in interest rate expectations over the short term domestically and abroad. Although SA CPI fell to 2.8% y/y in October, the central bank remains focussed on upside inflation risks developing abroad as well as a few local inflation drivers.
The domestic inflation outlook has improved; however, the SARB’s QPM model has revised the 2025 year-end repo rate higher. The cautious stance of the SARB comes as geopolitical conflicts continued in the Middle East and Europe, the prospect of US trade tariffs under a Trump presidency (which has supported the USD), and lastly, USD-ZAR has traded back above 18.0000 in November.
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