South Africa’s Financial Indicators: Interest Rates, Inflation, and Market Trends

Interest Rates

On March 22, 2025, the South African Reserve Bank (SARB) decided to keep the repo rate steady at 7.5%, continuing its cautious stance amid global and domestic economic uncertainties. This decision aligns with expert forecasts and aims to maintain stability as South Africa navigates international trade disruptions and fiscal challenges.

SARB Governor Lesetja Kganyago emphasized that while inflation remains controlled, factors such as external economic pressures and local budgetary constraints require a measured monetary policy approach.

Financial Indicators

Inflation

South Africa’s consumer price inflation remained stable at 3.2% in February 2025, marking the fourth consecutive month at this rate. The main contributors to inflation include:

• Housing and utilities: +4.4%
• Food and non-alcoholic beverages: +2.8%
• Maize meal prices: Reached a 17-month high due to supply chain inflation in farming and manufacturing.

The stable inflation rate provides some relief to consumers, but rising food prices remain a concern, particularly for staple items.

Economic Growth

The SARB has slightly adjusted its economic growth forecast for 2025, lowering it from 1.8% to 1.7%. This revision reflects weaker-than-expected demand and persistent supply chain disruptions. Additionally, the 2024 growth estimate was revised from 0.7% to 0.6%, indicating ongoing economic sluggishness.

These downward adjustments highlight the need for structural reforms to drive economic activity and long-term growth.

Currency and Stock Market

Following the SARB’s rate decision, the South African rand weakened, trading at approximately 18.22 against the US dollar, reflecting a 0.5% decline from the previous trading session.

On the stock market, the Top-40 index dropped by 0.8%, reflecting investor caution. However, despite short-term fluctuations, the SAALL stock index has gained 6.45% in 2025, showing resilience in local equities.

Fiscal Outlook

Fitch Ratings has raised concerns over South Africa’s debt trajectory, questioning the government’s ability to stabilize public finances. The budget estimates debt to peak at 76.2% of GDP, but Fitch forecasts a continued rise to 78.8% in FY25 and beyond.

While the government remains committed to fiscal consolidation, economic analysts warn that rising debt and public expenditure could pose long-term risks to financial stability.

South Africa’s economic outlook remains cautious, with stable inflation, moderate growth expectations, and a maintained interest rate policy. However, currency depreciation, stock market fluctuations, and debt concerns highlight ongoing economic vulnerabilities.

The SARB’s approach underscores the importance of careful financial management in navigating both global and domestic uncertainties to ensure economic resilience in 2025.

Also read: Save SA Calls for SRD Grant Increase as Godongwana Keeps It at R370 in Budget 2025