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South African central bank cuts key rate with inflation well-contained

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Photo by Reuters

29th May 2025

By: Reuters

  

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South Africa's central bank cut its main interest rate by 25 basis points to 7.25% on Thursday, after inflation came in below its target range for a second consecutive month.

The decision by the central bank's Monetary Policy Committee (MPC) was split, with five members preferring 25 basis point reduction and one favouring a 50 basis point cut.

Economists polled by Reuters had predicted a close call, as the bank's MPC is known for its cautious approach.

Price pressures are well under control in Africa's biggest economy, with headline consumer inflation at 2.8% year on year in April, undershooting the central bank's target range of 3% to 6%.

The South African Reserve Bank maintained its policy rate at 7.50% at its last meeting in March, citing risks from US President Donald Trump's global trade war and uncertainty surrounding the country's budget.

Those concerns have since partially eased, with Trump suspending his so-called reciprocal tariffs against South Africa and other countries and the local ruling coalition finding common ground on the budget.

Edited by Reuters

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