Interest rates might just lower further in July

Following the last interest rate cut, most experts are predicting a further rate cut rather than a hike at the scheduled July meeting, with virtually no analysts anticipating any increase in July; the only debate is between a modest cut or holding steady.

In the May 2025 MPC meeting, the SARB cut the repo rate by 25 bps to 7.25%, citing a markedly improved inflation outlook and fragile economic conditions. Notably, the decision in May was unanimous in favour of easing.

Most forecasters now see room for a further quarter-point reduction in July, barring any sudden deterioration in economic conditions. A few analysts urge caution, noting that the SARB could pause if new policy considerations (such as a lower inflation target) emerge, but even these voices acknowledge that current conditions are favourable for continued relief.

“South Africa’s macro conditions justify an easing bias: inflation is well below target and expected to stay low into next year, while economic growth is weak and in need of a boost,” says Adrian Goslett, regional director and CEO of REMAX Southern Africa.

He remains hopeful for another interest rate cut at the July meeting. “The expectation of another interest rate cut by the South African Reserve Bank is welcome news. Currently, the property market is experiencing steady demand, but affordability remains a critical barrier for many potential homebuyers, particularly first-time buyers. Even a modest interest rate cut can provide substantial relief to households, easing financial pressures and enabling more families and individuals to enter the property market,” he notes.

From a broader perspective, Goslett says that reducing interest rates will also positively impact consumer sentiment and overall economic stability, both of which are crucial for a healthy and dynamic property market. “A continued easing in monetary policy will further support property price stability and transaction volumes, ultimately benefiting homeowners, buyers, and investors alike.”

However, as promising as things are at the moment, SARB Governor Lesetja Kganyago did caution that the global environment remains uncertain – citing concerns such as volatile capital flows and geopolitical risks – meaning the SARB will proceed carefully and not pre-commit to a long cutting cycle.

‘While it is not unreasonable to expect an interest rate cut in the months to follow, I would caution buyers against relying on it as a certainty when looking at their affordability levels,” Goslett concludes.

Issued by: Kayla Ferguson