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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
January 30, 2025

Interest Rate

25 Basis Point Cut Interest Rate Cut

The interest rate has been cut by 25 basis points, aligning with market expectations. The Reserve Bank remains cautiously optimistic, forecasting contained inflation and an economic growth projection of 2.0% in the medium term. Increased disposable income and stable electricity supply are positive signs, despite some supply challenges in mining and manufacturing.

The interest rate has been reduced by another 25 basis points, a move that some market analysts anticipated. The Reserve Bank remains cautious, highlighting its commitment to closely monitoring local and international developments, especially the potential trade war among major economies. Importantly, inflation is expected to remain contained for at least the first half of 2025, with core inflation projected to stay within the target range of 3% to 6%.

Rising confidence levels and a stable electricity supply offer promising signs for economic growth in late 2024 and into 2025, with a growth projection of 2.0% for 2027. Commissioner Lesetja Kganyago emphasised that there are still upside risks, particularly regarding currency depreciation due to increased international tariffs linked to possible trade wars. Additionally, administered prices are expected to rise significantly, well above current inflation levels, which could further influence inflation in the economy.

On the demand side, the economy is rebounding from a low base, supported by increased disposable income resulting from withdrawals from the two-pot pension system and recent interest rate reductions since September 2024. However, the supply side remains subdued, with mining and manufacturing production figures still falling short of expectations.

The Governor also stated that the Bank’s inflation forecast for 2025 is around 4.5%. Future interest rate decisions will be data-driven, taking into account current economic conditions and international developments that may impact the domestic economy later in 2025.

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More Coverage

South Africa is trapped in severe economic stagnation, facing a projected 1.0% growth rate for 2026, 33.6% unemployment, and sharp contractions in mining (-12.7%) and manufacturing (-4.3%). Exposed to global fuel shocks via depleted reserves and >R12.00/litre pump levies, the nation is also caught in a fiscal spiral where national debt nears 80% of GDP and interest payments exceed R1 billion daily. Escaping this trap requires four urgent structural reforms: halting interest rate hikes for supply-side inflation, replacing rigid B-BBEE quotas with job-creation incentives, scrapping Expropriation Without Compensation (EWC), and deregulating Transnet’s logistics corridors.

Mining Production and Sales for August 2026

South Africa’s mining sector remains a vital source of jobs, foreign exchange and economic growth, but August’s sharp fall in mining output and sales highlights the mounting pressure on the industry. Rising fuel and energy costs, policy uncertainty and growing trade challenges are weighing on producers, even as firm gold prices and temporary US tariff exemptions offer some relief. Read the full report for a closer look at the latest figures, the forces shaping the sector and what they could mean for mining’s future in South Africa.

MACROECONOMIC & INVESTMENT INSIGHTS | OCTOBER 2026

A $100-plus oil price, a weaker rand and record fuel hikes are putting South Africa’s economy under mounting pressure, while strategic reserves offer little protection. This report examines how imported inflation is squeezing households and businesses, why higher interest rates may do little to tackle its root causes, and how sluggish growth and rising debt are tightening the fiscal squeeze. It also explores the stakes for trade with the United States and AGOA, and the policy choices that could restore investor confidence, unlock growth and put the country on a more resilient path.

International Trade and Trade Balance – August 2026

South Africa recorded a trade surplus of R20.4 billion in August 2026, as exports continued to outpace imports. Export growth has exceeded import growth over the first eight months of the year, reflecting subdued domestic demand among businesses and consumers. But with higher fuel prices and tighter monetary policy expected to weigh on spending, demand is likely to recover only gradually. Read the full report for a closer look at the trade figures and what they could mean for South Africa’s economy in the months ahead.

Private Sector Credit Extension (PSCE): August 2026

South Africa’s credit market is showing surprising resilience, with credit demand rising by 7.5% in August 2026 despite renewed interest-rate pressure, elevated inflation and mounting household costs. While mortgage advances continued to grow, the fragile recovery in the property market highlights the strain caused by subdued investment, high debt levels and rising municipal and energy expenses. At the same time, sluggish instalment credit growth and continued reliance on short-term borrowing reveal how consumers are navigating increasingly difficult financial conditions. With higher oil prices, geopolitical risks and further SARB tightening adding to the pressure, this report examines what the latest credit trends reveal about household finances, business confidence and the broader South African economy.