South Africa’s inflation rate has dropped to just 3%, and economists believe this could lead to a repo rate cut in September 2025. This comes as good news for consumers, homeowners, and businesses hoping for relief from high interest rates.
The South African Reserve Bank (SARB) kept the repo rate at 7.25%, but with inflation now at the lower end of the target range, many experts say a cut is likely.
READ MORE: Reserve Bank Cuts Repo Rate Amid Lower Inflation and Stronger Rand
What the Latest Inflation Data Shows
In June, South Africa’s headline inflation eased to 3%. That’s the lowest in months. Core inflation, which excludes food and fuel, dropped to 2.9%.
One of the biggest reasons for this drop is cheaper petrol. Fuel prices have fallen by more than 11% compared to last year, helping slow down price increases overall.
These signs of stability support the case for a repo rate cut, especially as inflation is now well within SARB’s target of 3% to 6%.
What Economists Are Saying
Many leading economists believe SARB will cut interest rates soon.
- Jee-A van der Linde, from Oxford Economics Africa, says a 25 basis point repo rate cut is likely in Q3 2025, with September the most probable date.
- Koketso Mano, FNB senior economist, also expects a 25 basis point cut. He says the drop in inflation and stable expectations make a September cut possible.
- Annabel Bishop, Investec economist, adds that inflation has been below 4.5% for almost a year, which supports one or two cuts in the months ahead.
Why a Repo Rate Cut Matters
The repo rate is the interest rate at which SARB lends money to banks. When this rate goes down:
- Banks reduce lending rates.
- Home loan repayments become cheaper.
- Personal loans and credit card interest rates drop.
- Small businesses can borrow at lower costs.
In simple terms, a repo rate cut means more money in your pocket.
Will This Help the Economy?
Yes. Lower interest rates usually boost economic activity. People spend more, businesses invest more, and the economy grows.
South Africa is currently facing low growth and high unemployment. A repo rate cut would ease some of that pressure. It would also support businesses trying to recover from weak demand and high operating costs.
When Will the Cut Happen?
The SARB is expected to keep the repo rate unchanged at its next meeting on 31 July 2025.
However, economists believe the next cut will likely happen in September 2025, especially if inflation stays low.
Some experts even predict a second repo rate cut in early 2026 if inflation remains under control.
Source: Reuters – Analysts expect repo rate cut
What Are the Risks?
While the outlook supports a repo rate cut, there are still risks:
- If the rand weakens, import costs could rise.
- A sudden spike in fuel or food prices could push inflation up again.
- Global uncertainty and interest rate changes in other countries may affect SARB’s decisions.
The Reserve Bank remains cautious. It wants to keep inflation steady and avoid any sudden shocks to the economy.
How Will This Affect You?
If the repo rate is cut:
- Bond repayments will be slightly lower.
- People with personal loans and car financing may save on interest.
- It becomes easier for first-time buyers to qualify for home loans.
- Businesses get more affordable access to credit.
Even a small cut can bring welcome relief to households struggling with high debt and living costs.
READ MORE: South Africa’s Inflation Remains Unchanged at 2.8% in May: What Economists Expect Next
With inflation now at 3% and fuel prices down, the conditions are right for a repo rate cut. Economists expect SARB to move in September 2025. This will help ease pressure on South Africans and support a slow but steady economic recovery.
The next few months will be key. If inflation stays low, South Africans may enjoy lower interest rates and better financial conditions before the year ends.