The delays in cutting the interest rate, despite the favourable conditions, have been detrimental to the primary objective of SA's economic growth and job creation. There is simply no longer any time for a “wait and see” approach.
Source: Supplied. Samuel Seeff, chairman of the Seeff Property Group.
This is the take-home message of Samuel Seeff, chairman of the Seeff Property Group, who has renewed his call for the Reserve Bank to take a bold approach and provide another rate cut of at least 25bps. The current repo rate stands at 7.25% and the prime rate at 10.75%.
"The economy and the property market need an injection of energy, and we urge the Bank to focus on what the SA economy needs, namely a bold rate cut," Seeff says. "This could serve as a rocket to push the economy and try and grow the GDP, a critical necessity given the unemployment rate and what is best for everyone in South Africa."
Muted market response
As we head towards another interest-rate decision this week, the rate is still some 100bps higher compared to the pre-pandemic rate in January 2020. Seeff argues that the Bank's "overly cautious" stance has meant that it had missed at least two prior opportunities to cut the rate earlier and provide a more meaningful economic boost.
While the four rate cuts since mid-2024 have provided welcome relief to consumers, home owners and property buyers, it has had little overall impact on the economy and property market. Overall property transaction volumes for the first half of this year compared to last year are down by about 16% despite the rate cuts.
Additionally, the first quarter GDP growth of just 0.1% has been well below expectation, and it seems that the South African Reserve Bank’s expected growth rate of 1.2% for 2025 may well come under pressure, particularly in view of the delayed response to the Trump Tariff implications for the local economy.
Positive policy signals
The slow rate-cutting cycle is also particularly glaring given the robust economic fundamentals over recent months. Both the Bank’s key indicators have been very positive for rate cuts.
Inflation has been consistently within or below the Sarb's 3-6% target range, even hitting 2.8% in April and May 2025 before a slight uptick to 3.0% in June.
The currency has remained fairly stable against the USD, often trading below R18/USD, as is the current case.
