SARB Cuts Repo Rate by 25 Basis Points: Prime Lending Rate Drops to 10.25% as Inflation Eases
Pretoria – South African Reserve Bank Governor Lesetja Kganyago has delivered welcome news for borrowers by announcing a 25 basis point cut to the repo rate, bringing it down to 8%. This move, revealed on Thursday, 21 November 2025, after a three-day Monetary Policy Committee meeting, will see the prime lending rate fall to 10.25%. The decision, which was unanimous among MPC members, reflects growing confidence in the country’s economic outlook as inflation continues to cool. For everyday South Africans facing high living costs, this could mean lower monthly payments on home loans, car finance, and other debts, offering a bit of breathing room amid tough times.
The cut was widely expected by economists and markets, following a trend of gradual easing since September 2025 when the bank first trimmed rates after a long period of hikes to tame rising prices. Kganyago’s announcement underscores the SARB’s careful approach to supporting growth while keeping a close eye on risks like global oil prices and currency swings.
Unanimous Decision Signals Steady Path Ahead
Kganyago shared the news during a media briefing in Pretoria, explaining that all MPC members agreed on the step. He pointed to the bank’s Quarterly Projection Model, which forecasts more gentle cuts as inflation heads lower. “Because of these downside surprises, together with a stronger rand and a lower oil price assumption, we have small downward revisions to our inflation outlook, for both 2025 and 2026. We remain on track to deliver 3% inflation over the medium term,” Kganyago said.
The Governor stressed that the SARB will keep watching inflation closely to ensure it stays in check. Recent data shows headline inflation at 4.4% in October 2025, down from 5.9% a year earlier, thanks to lower fuel costs and a stable rand. Core inflation, which leaves out food and energy, sits at 4.3%, within the bank’s 3-6% target range. This progress has given the MPC room to ease policy without sparking price jumps.
Economists like those from Nedbank and Investec had predicted this cut, citing softer global growth and falling commodity prices as helpful factors. The move aligns with similar steps by central banks worldwide, like the US Federal Reserve’s recent trims, as economies recover from pandemic shocks.
Economic Boost for Households and Businesses
For many South Africans, this rate drop brings real relief. Homeowners with variable-rate bonds could save hundreds of rands monthly on repayments. For example, on a R1 million bond over 20 years at the old prime rate of 10.5%, payments were about R10,000 a month; now at 10.25%, that dips to around R9,900 – a small but meaningful cut in tight budgets.
Small businesses, often hit hard by high borrowing costs, stand to gain too. Lower rates make loans cheaper, helping firms expand or hire more staff. The Manufacturing Circle welcomed the decision, saying it could spark investment in factories and jobs. However, some warn that deeper cuts might be needed to really kick-start growth, with GDP expected at just 1.1% for 2025.
Kganyago noted upside risks like higher electricity tariffs and wage demands could push prices up, but the outlook remains positive. The rand strengthened slightly after the announcement, trading at around R17.80 to the US dollar, reflecting market approval.
Broader Context: SARB’s Balancing Act in a Tough Economy
This is the third cut in 2025, following 25 basis point trims in September and July, bringing the repo rate down from a peak of 8.25% earlier in the year. The SARB started hiking in late 2021 to fight inflation that spiked to 7.8% amid global supply issues and the Ukraine war. Now, with prices easing, the focus shifts to growth.
South Africa’s economy has faced headwinds like load shedding, high unemployment at 33%, and slow reforms. The rate cut aims to encourage spending and investment without overheating. Kganyago reaffirmed the bank’s independence, saying decisions rest on data, not politics.
Looking ahead, the MPC’s model sees inflation averaging 4.5% in 2026, allowing for more easing if trends hold. Analysts from Standard Bank predict another 50 basis points off by mid-2026, potentially bringing prime to 9.75%.
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