South Africans are anticipating a potential interest rate cut in January 2025, but the outcome remains uncertain. The Monetary Policy Committee (MPC) will make its decision on January 30, 2025. While inflation is currently within the target range, the weakening rand and volatile oil prices add complexity to the situation.
South Africans are hoping for an interest rate cut in January, but there is uncertainty on whether this will materialize. The Monetary Policy Committee (MPC) is set to announce on January 30, 2025, whether interest rates will change, and while many are hopeful for a cut, the outcome remains uncertain. \'The MPC has consistently taken a cautious approach in each of these meetings.
While many had hoped for larger and more timely rate cuts, the outcomes have repeatedly fallen short of expectations,' Goslett said. The forecast sees interest rates easing further in future, steadying just above 7%. However, this rate path from the Quarterly Projection Model is a broad policy guide. Due to the Sarb seeing interest rates decline to around 7% within the near future, there is reason to be cautiously optimistic about a possible rate cut this month, according to Goslett. \With inflation sitting at 2.9% in November 2024, it is still well within the target range of the Sarb, however, the rand has also weakened against the dollar, plus oil prices remain volatile. While further interest rate cuts cannot be guaranteed, Goslett said: 'Unless circumstances take a dramatic change for the worse, it is not expected that interest rates will increase any further this year. At best, we should see interest rates drop to around 7% over the course of the year, and at worst, interest rates should hopefully just remain unchanged at the current rate of 7.75%.' 'Ultimately, my hope is that we will start to steer away from an overly cautious approach and give the economy a much-needed boost by cutting rates more aggressively over the course of this year.' \The inflation cycle will continue in January due to inflation being below the target band for the past few months. In October and November, inflation was 2.8% and 2.9%, respectively, which is lower than the Sarb target band of 3% to 6% and there is room to lower the interest rate further. Grobler said: 'Consumers have suffered from large price increases in the past few years while the interest rate has risen by 475 basis points since November 2021 and has only dropped by 50 basis points.' 'The interest rate is expected to be reduced two or three more times in 2025, potentially leading to a total decrease of at least 100 basis points or possibly 125 basis points.'
INTEREST RATES INFLATION SOUTH AFRICA MONETARY POLICY ECONOMY
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