MNI SARB Preview - Jan 2025: Another Cautious Cut Expected
Executive Summary:
- Benign inflation developments leave room for continued monetary easing.
- However, more hawkish external environment and lingering risks warrant caution.
- The SARB is widely expected to deliver another 25bp cut.
Full preview including summary of sell-side views here: MNI SARB Preview - January 2025.pdf
The South African Reserve Bank (SARB) will likely deliver another 25bp cut to the repo rate, taking it to 7.25%, despite the materialisation of certain inflationary risks. A streak of downside CPI surprises and monetary easing delivered by core central banks to date leave some room for the SARB to loosen the screws of its monetary policy. However, the outlook beyond this week’s meeting is more uncertain. The external environment has evolved in the hawkish direction, the rand has weakened since the previous meeting, while the SARB repeatedly emphasised its preference to err on the side of caution. Analyst consensus is almost unanimous for a decision to reduce rates by 25bp at the upcoming meeting.