South Africa Interest Rate1998-2020 Data | 2021-2023 Forecast | Calendar

The South African Reserve Bank left its benchmark repo rate unchanged at a record low of 3.5% during its November meeting, as widely expected. The decision was not unanimous and follows 300 bps rate cuts so far this year to support an economy already in recession before the pandemic shock. Policymakers said that the risks to the growth outlook are assessed to be balanced while overall risks to the inflation outlook appear to be to the downside in the near term and balanced over the medium term. The Reserve Bank also said that further easing was not likely in the near term but hinted two rate increases in the Q3 and Q4 of 2021. The Committee now expects that the economy will shrink by 8% in 2020, compared to September's estimate of a 8.2% contraction, before rebounding by 3.5% (previously 3.9%) in 2021 and 2.4% in 2022 (previously 2.6%). Estimates also point to 3.2% inflation in 2020 (vs prior 3.3%), 3.9% in 2021 (vs prior 4%) and 4.4% in 2022 (unrevised).

The South African Reserve Bank held its benchmark repo rate unchanged at a record low of 3.5% during its September meeting, as widely expected. The decision was not unanimous and follows 300 bps rate cuts so far this year to support an economy already in recession before the pandemic shock. Policymakers said that both the risks to the growth outlook and the inflation outlook are assessed to be balanced, adding that monetary policy alone cannot improve the potential growth rate of the economy or reduce fiscal risks. The Reserve Bank also said that further easing was not likely in 2020 but hinted two rate increases in the Q3 and Q4 of 2021. The Committee now expects that the domestic economy will shrink by 8.2% in 2020, compared to July's estimate of a 7.3% contraction, before rebounding by 3.9% (previously 3.7%) in 2021 and 2.6% in 2022 (previously 2.8%). Estimates also point to 3.3% inflation in 2020 (vs prior 3.4%), 4% in 2021 (vs prior 4.3%) and 4.4% in 2022 (vs prior 4.3%).

The South Africa Reserve Bank slashed its key repo rate by 25bps to a new all-time low of 3.50% on July 23rd 2020, as widely expected. The move follows a 50bps rate on May 21st, amid the coronavirus crisis. Policymakers said that investment, exports and imports will likely fall sharply and job losses are projected to rise even if lockdown restrictions are relaxed further in the coming months. The Committee expects that the domestic economy shrinks by 7.3% 2020, compared to a previous estimate of a 7% contraction to then grow by 3.7% in 2021 and 2.8% in 2022. Policymakers noted that the economic contraction and slow recovery will keep inflation well below the midpoint of the target range this year. The Committee also relaxed regulatory requirements on banks aiming to free up more capital for lending by financial institutions to households and firms. Since the beginning of 2020, the central bank has cut its key repo rate by a total of 300 bps.

The South Africa Reserve Bank slashed its key repo rate by 50bps to 3.75% during its May meeting. The move follows a 100bps rate cut in April’s emergency meeting, bringing borrowing costs to its lowest level on record, amid the coronavirus crisis. Policymakers said that monetary policy can ease financial conditions and improve the resilience of households and firms to the economic implications of the coronavirus outbreak. The Committee also relaxed regulatory requirements on banks and said that it has taken important steps to ensure adequate liquidity in domestic markets. Policymakers expect a 7% GDP contraction in 2020, even if lockdown restrictions ease in the next months. The Committee noted that the economic contraction and slow recovery will keep inflation below the midpoint of the target range. Policymakers said that they will continue to closely monitor new data and risks and will seek to look through temporary price shocks and focus on second round effects.