By Vuyani Ndaba

Johannesburg (Reuters)

The South African Reserve Bank is expected to lower its repo rate by 0.25% to 7.50% next week and again in March, but will delay the final 25 basis point cut to the third quarter, according to a Reuters poll.

As U.S. President Donald Trump’s administration settles in, the South African Reserve Bank is anticipated to ease interest rates gradually while awaiting clarity on his proposed tariffs and policies.

All 19 economists surveyed agreed that the SARB would decrease its repo rate by 25 basis points to 7.50% on January 30.

A slim majority of those polled expect another cut, bringing the rate to 7.25% in March. Median forecasts indicate that the final cut for this cycle will be delayed until the third quarter. A prior survey had anticipated a cut in May.

Johannes Khosa, an economist at the Nedbank Group Economic Unit, expected only two cuts of 25 basis points each, predicting a repo rate of 7.25% by the end of 2025.

Khosa commented, “We believe Trump’s policies, if implemented, will lead to inflation. This could make inflation sticky and cause the U.S. Fed to slow down or halt rate cuts, which might force SARB to reduce its cuts to maintain the interest rate differential.”

The rand weakened following Trump’s inauguration and related policy announcements, including potential tariffs on the European Union and discussions of a 10% duty on Chinese imports.

The U.S. Federal Reserve is also poised to meet soon, likely maintaining its benchmark rate as it monitors developments related to Trump’s administration and bond market challenges.

Inflation in South Africa rose for the second consecutive month in December, hitting 3.0% year-on-year, which is still below the Reserve Bank’s 3%-6% target range. The poll forecasts inflation averages of 4.1% this year, rising to 4.5% next year.

South Africa’s economy is projected to grow by 1.7% this year and by 1.9% next year. David Omojomolo, an Africa analyst at Capital Economics, noted signs of ongoing macroeconomic improvements.

Omojomolo stated that the impacts of load-shedding and logistics issues should diminish, and the agriculture sector, which previously led to GDP contraction in Q3, is expected to recover. Capital Economics was among the most optimistic regarding growth, predicting a 2.3% increase in South Africa’s economy this year.

(Other stories from the Reuters global economic poll)