South African central bank trims key rate but stresses tough backdrop
2024.11.21 09:36
PRETORIA (Reuters) – South Africa’s central bank opted for another small cut to its main interest rate on Thursday, stressing the global economic backdrop was tough and the outlook highly uncertain despite domestic inflation falling below its target.
The decision to lower the repo rate by 25 basis points (bps) to 7.75% was unanimous, with the Monetary Policy Committee not discussing a larger 50 bps cut, South African Reserve Bank Governor Lesetja Kganyago told reporters.
The majority of economists in a Reuters poll published last week had predicted a 25 bps cut, the same size of cut as in September.
Annual inflation slowed sharply to 2.8% in October, its lowest level in over four years, dropping below the central bank’s 3% to 6% target range.
“The Committee agreed that reducing the level of policy restrictiveness is still consistent with achieving the inflation target. The risk outlook, however, requires a cautious approach,” Kganyago said.
“Global interest rates could well shift higher again, and the recent rand depreciation demonstrates how rapidly changes in the global environment can affect South Africa.”
Alongside other emerging market currencies, the rand has sold off since Donald Trump’s U.S. election win, losing more than 3% against the dollar.
