MNI SARB Review - July 2025: Aiming Lower

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Executive Summary:

• The central bank delivered a unanimous decision to cut rates by 25bp.
• The SARB shifted its implicit inflation target lower to +3.0% Y/Y.
• Talks with the Treasury on the formal inflation target reform are ongoing.

The South African Reserve Bank (SARB) took the opportunity provided by dampened inflation and receding inflation expectations and delivered the expected 25bp cut to its policy rate, bringing it to 7%. Uncertainty remained a key theme of the statement as global risks abound. Alongside the rate decision, the central bank took another step in the ongoing overhaul of its inflation-targeting regime. Although the reform is still technically in the works, the Monetary Policy Committee (MPC) now explicitly declared that it will aim to keep inflation at the bottom of its official target range (+3.0-6.0% Y/Y) and said it would use forecasts assuming a +3% Y/Y target as a point of reference at future meetings.