Fundamentals aligned, Reserve Bank urged not to miss rate cut opportunity

Ahead of this week’s interest rate announcement, Samuel Seeff, chairperson of the Seeff Property Group, has directly called on the Reserve Bank not to miss the window of opportunity to provide vital interest rate relief to consumers, the economy, and the property market.

While we have seen small steps in the right direction since mid-2024, the current repo rate of 6.75% (prime at 10.25%) still hinders the much-needed economic recovery. Seeff says we are in a unique phase where all the important economic indicators align perfectly with the Bank’s mandate, providing every opportunity to expect a meaningful rate cut.

South Africa is finally off the Grey List, the Rand is significantly stronger, and inflation is under control. It is now time for the Bank to consider ordinary South Africans, allowing them to reduce their debt and unlock further investment. This is a critical opportunity which must not be missed; the Bank must take advantage and make it happen now.

Aside from a vital 25 bps reduction this week, Seeff says the Bank should also set the tone for a further 25 bps cut before mid-year. Ultimately, the aim must be to move closer to the 7% prime rate seen during the pandemic, which kickstarted the economy and resulted in GDP growth of close to 5% in 2021.

The overwhelming challenge for the country remains unemployment, to combat this, we need 4-5% growth for a decade. We must move beyond talking and take the decisive action needed to bring the cost of debt down, free up disposable income and unlock investment and growth in the economy as illustrated in 2021.

The economic data supports this. Inflation for 2025 averaged just 3.2%, the lowest in 21 years. Despite the recent marginal uptick to 3.6%, it remains comfortably within the Bank’s new lower target range of 2-4%. The Rand has strengthened notably, dipping below R16.00 to the US Dollar this week for the first time since mid-2022. Additionally, the oil price is nearly 18% lower compared to January 2025. The Bank clearly has the “breathing room” it needs to be decisive, he says.

Given the debate around the repo versus the prime rate, the high-interest rate burden on consumers and the economy is clearly acknowledged. Seeff says it is now time for the Bank to consider ordinary South Africans, and enable them to reduce their debt and unlock further investment to grow the economy. There is no doubt that the Bank now has the opportunity to act decisively.

The slow pace of the current cutting cycle has dampened both the broader recovery and property transaction volumes. While the market is showing signs of life with an improved outlook for 2026, remaining “unnecessarily restrictive” is a risk we simply cannot afford. He says a meaningful cut now would send a powerful signal of confidence, effectively kick-starting the 2026 growth cycle from the very first quarter.

Issued by Gina Meintjes