Eighteen of 20 economists surveyed in the past week said the South African Reserve Bank would hold interest rates at 8.25% on July 18 and the median forecast showed a trim in September.

Two expected a cut on Thursday. Another 25-basis-point cut was expected in November, with the rate ending the year at 7.75%, the poll showed. "Although we think monetary authorities will be cautious and only start lowering the repo rate from Q4 2024, the odds of a 25-bps rate cut in September have risen post-elections," said Jee-A van der Linde, Senior Economist for Africa at Oxford Economists.

"Even if the SARB cuts interest rates a couple of times this year, it wouldn't be inflationary as monetary policy would remain restrictive.

"The Reserve Bank tries to keep inflation within a targeted 3%-6%. Inflation was expected to slow to an average of 4.9% this year and 4.5% in 2025, from 5.2% on the year in May.”

Gina Schoeman, Head of SA Research at Citi, said the door was opening quickly for potential rate cuts in September and November. "The SARB just needs to manage expectations around normalising rates and a potential lowering of the inflation target," she added.

Economic growth in SA is expected at 1% this year and 1.7% in 2025.

--Reuters--