MNI SARB Review - Jan 2025: Cautious Re: External Environment
Executive Summary:
- The SARB cut rates by 25bp, but its message was one of caution.
- There were two hawkish dissenters, a shift from previous unanimous votes.
- Key risks are assessed to stem from the external environment.
Full review including summary of sell-side views here: MNI SARB Review - January 2025.pdf
The South African Reserve Bank (SARB) delivered a widely anticipated 25bp cut to the repo rate, bringing it to 7.50%, closer to its modelled neutral level. The central bank was relatively satisfied with near-term domestic inflation developments, projecting on-target headline and core inflation over the forecast horizon and conceding that inflation expectations are now aligned with its objectives. However, the Monetary Policy Committee (MPC) sharpened its language around medium-term risks, which it assessed to be skewed to the upside and primarily rooted in the external environment. Against this backdrop, two policymakers called for an on-hold rate decision, but a majority of four was enough to get another cut over the line.