FNB welcomes rate cut as timely boost for households, businesses

Source: Supplied. FNB chief executive officer, Harry Kellan.

This was the sentiment of First National Bank's chief executive officer Harry Kellan in the wake of the central bank's announcement yesterday afternoon.

"We do expect certain sectors will be adversely affected by the new tariffs, but this does not fully erode the good growth momentum across the economy as we expect to see real growth for 2025 as an improvement on that of 2024 and this should continue into next year."

Kellan noted that the rate cut will provide immediate relief to consumers and businesses by lowering the cost of borrowing.

“Key sectors of the economy such as construction, retail and manufacturing have shown early signs of slowing. Today’s rate cut sets out to stabilise and reverse these trends by increasing affordability of credit and encouraging investment.

"Encouragingly, our inflation outlook remains benign and, while we’ve seen a sustained period of uninterrupted electricity supply, we’re certain that this will yield cumulative, positive results for consumers and businesses.”

He added that consumers could both reduce costs and improve the efficiency of their banking services by using the wide range of services available on the FNB Banking App and the bank’s Nav channel. For consumers dependant on a fixed income, this approach is even more valuable.

FNB chief economist Mamello Matikinca-Ngwenya says, “While we expected the MPC to reflect more restraint amid a contentious global trade environment that could intermittently weigh on sentiment, lift the cost of borrowing, and weaken the rand, its decision is not a surprise. It highlights the MPC’s focus on stable domestic conditions.

“Despite adverse global conditions and rising local inflation, as positive base effects fade and food-price pressures mount, headline inflation over the coming months should remain contained around the 4.5% midpoint of the target range.

"The trajectory is supported by weak oil prices, along with a benign local environment, factors of which should assist with containing inflation expectations and maintaining interest rates as we think this is the last cut in this cycle. Ambitions to lower the inflation target should keep monetary policy steady."

First National Bank (FNB) will reduce its prime lending rate by 0.25% following the decision taken on Thursday, 31 July 2025 by the South African Reserve Bank Monetary Policy Committee to lower its benchmark repo rate by 0.25%. FNB will adjust its rates on prime-linked accounts with effect from Friday 1 August 2025.