MNI SARB Preview - Jul 2025: Opportunistic Disinflation

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Executive Summary:

• The SARB is expected to cut the policy rate by 25bp.
• Benign inflation picture leaves space for monetary easing.
• Imminent inflation target overhaul complicates the outlook.

The prevailing view is that the combination of a benign inflation picture and risks to growth will prompt the South African Reserve Bank (SARB) to cut the repo rate by 25bp to 7.00%. Although the economic outlook is clouded by the unstable global tariff regime and other sources of uncertainty, domestic inflation appears stabilised and is expected to remain benign in the coming quarters. This underlying picture creates conducive conditions for an immediate interest-rate reduction, the outlook is complicated by ongoing work on inflation target reform. The SARB is in talks with the government amid efforts to leverage the current ‘opportunistic disinflation’ and change the inflation-targeting regime to anchor price growth at lower levels.