South Africa’s central bank has lowered its interest rate, highlighting the challenging global economic conditions and the level of uncertainty surrounding future prospects, even as the country’s inflation rate hit the lowest figure in 4 years.
The Monetary Policy Committee unanimously agreed to cut the interest rate by 25 basis points (bps) to 7.75%, as stated by South African Reserve Bank Governor Lesetja Kganyago during a press briefing.
“The Committee concurred that a reduction in the level of policy restrictiveness remains aligned with achieving the inflation target. However, the risk outlook necessitates a prudent approach,” Kganyago remarked.
He added “Global interest rates may potentially rise again, and the recent depreciation of the rand illustrates how swiftly shifts in the global landscape can impact South Africa.” In line with other emerging market currencies, the rand has depreciated since Donald Trump’s election victory, losing over 3% against the dollar.
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Annual inflation experienced a notable decline, reaching 2.8% in October, marking its lowest point in over four years and falling beneath the central bank’s target range of 3% to 6%.
The slowing inflation is good news for one of Africa’s largest economy as it hopes to recover from the economic woes of the Covid years.
