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South African Reserve Bank Governor Lesetja Kganyago emphasized the need for caution in adjusting interest rates to avoid future regrets amid uncertainty. In a CNBC Africa interview, he stated that the recent policy adjustments were deemed appropriate, highlighting the importance of not contributing to existing data noise.
South Africa's current-account deficit narrowed unexpectedly in the third quarter, with the gap shrinking to an annualized 1% of GDP, or 70.8 billion rand ($3.9 billion). This improvement was driven by a larger decline in the value of goods exports compared to merchandise imports, according to the South African Reserve Bank.
South African stocks are on a record-setting rally, up over 7% in dollar terms since the establishment of a business-friendly unity government in July, significantly outperforming emerging-market peers. The positive momentum is bolstered by eight months without disruptive power blackouts and inflation falling below the central bank's target, raising hopes for interest rate cuts. However, concerns remain about whether companies can meet rising earnings expectations to sustain this growth into 2025.
South African Reserve Bank Governor Lesetja Kganyago has indicated that interest rates will be cut cautiously in 2025, following a recent reduction of 25 basis points to 7.75%. The bank's model suggests rates may stabilize slightly above 7%, but this projection serves as a broad policy guide amid ongoing uncertainty.
South African Reserve Bank Governor Lesetja Kganyago announced that the review of the inflation target, currently set between 3% and 6%, is nearing completion. He indicated that discussions with the Treasury are rigorous, and a timeline for the new target will be provided once the process concludes.
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