JOHANNESBURG, Sept 12 (Askume) – South African analysts, traders and unions further lowered their expectations for inflation in the third quarter of this year, bringing it closer to the central bank’s target, a quarterly survey showed on Thursday.
The findings – a key data point at the central bank’s monetary policy meeting – will further strengthen expectations that the central bank will cut its key interest rate (ZAREPO=ECI) for the first time in more than four years on Sept. 19 .
The Bureau of Economic Research survey showed that average inflation expectations in 2024 fell from 5.3% in the second quarter to 5.1% in the third quarter.
The average growth rate in 2025 fell to 4.8% from 5.0% in the second quarter, and the average growth rate in 2026 fell to 4.8% from 4.9%.
The South African Reserve Bank (SARB) is trying to keep inflation around 4.5%, the midpoint of its 3%-6% target range. Explaining its previous decision to keep interest rates on hold, it said inflation expectations remain uncomfortably high.
Year-on-year inflation fell to near the midpoint of 4.6% in July, fuelling expectations of a rate cut in September. August inflation data will be released on September 18, a day before the SARB announces interest rates.
At the last monetary policy meeting in July, two of the six members of the SARB monetary policy committee voted in favour of a 25 basis point rate cut, while four decided against making any change.
Of concern for the central bank is that the latest inflation expectations survey shows household inflation expectations have risen sharply, from 6.4% in the second quarter to the highest level this year of 6.9%.
This increase was driven by lower-income respondents, suggesting that South Africa’s poorest may be more vulnerable to price pressures.
