July: INTEREST RATES REMAIN UNCHANGED

This afternoon, the Monetary Policy Committee of the South African Reserve Bank ('SARB') convened its fourth meeting of the year. In accordance with economists' recent predictions, SARB has yet again elected to keep the repurchase rate ('repo rate') at 8.25% to regulate inflation, maintain financial stability, and encourage economic growth. Accordingly, the prime lending rate of commercial banks remains unchanged at 11.75%.

It marks the seventh consecutive meeting in which SARB has declined to adjust the repo rate. Although numerous emerging economies' central banks have proceeded to cut interest rates in 2024, SARB has consistently emphasised that South Africa's inflation target is effectively 4.5%. For SARB, inflation hovering around the upper end of this target range weakens economic performance. On the domestic front, high unemployment has eroded consumer confidence and recent business rescue filings by major corporations underscore the country's arduous prevailing economic conditions.

Previously, economists incorrectly estimated that SARB would lower the repo rate in the first or third second quarter. Given SARB's cautious approach thus far, some financial experts predict that the repo rate freeze may continue into 2025.