The South African Reserve Bank has reduced its policy rate by 25 basis points to 7%, effective August 1, with the decision being unanimous among the Monetary Policy Committee (MPC) members.
Governor Lesetja Kganyago stated that the MPC prefers inflation to settle at 3%, aiming for the bottom of the inflation target range of 3%-6%.
The bank expects headline inflation to rise over the next few months, averaging 3.3% for the year, before stabilizing around the target objective.
Despite a downward revision to the GDP data and higher US tariffs on South Africa, the bank still expects modestly higher growth in the coming years, supported by ongoing structural reforms.
Kganyago emphasized the importance of sustaining progress in minimizing uncertainty about the longer-term objectives of monetary policy and welcomed the recent moderation in inflation expectations.
