22/07/2024
Reserve Bank holds interest rates
once again
In a move widely anticipated by economists and industry experts, the South African Reserve Bank
Monetary Policy Committee (MPC) has once again voted to keep interest rates unchanged. The prime
interest rate therefore remains at 11.75% for the seventh straight meeting of the MPC.
“This year has been one of shifting goal posts in terms of the Reserve Bank implementing its interest
rate cutting cycle,” says MortgageMax CEO, Jors van Niekerk. “While we had hoped to see interest
rates being lowered within the first half of 2024, we remain optimistic that we will still see at least one
rate cut before the end of 2024. Historically, the South African Reserve Bank has followed US Federal
Reserve Bank policy and with the next meeting only set for the end of July, it was unlikely that the
Reserve Bank would cut interest rates ahead of the US,” he adds.
In spite of the fact that the prime interest rate has remained unchanged since July 2023, there are
positive indications that an interest rate cut is imminent. Consumer Price Inflation held steady in
May at 5.2% and industry experts are hopeful of another decrease in June. Headline inflation is also
projected to fall to an average of around 5.1% this year, down from 6.0% in 2023. This will bring it
significantly closer to the 4.5% mid-point of the Reserve Bank’s 3%–6% target range and Reserve Bank
governor Lesetja Kganyago has indicated that the central bank expects to see inflation back within
target in the first half of 2025.
“After several months of uncertainty over the outcome of the elections, there is a real sense of
optimism in the country now that the Government of National Unity is in place. While this may not
have an immediate impact on inflation, we are hopeful that there is good news on the horizon for
South African consumers who have remained resilient in the face of rising food and fuel prices and
for all those who have been patiently waiting to get a foot on the property ladder,” concludes Van
Niekerk.