It looks like South Africans can expect only one interest rate cut in 2025, according to analysts at the Bank of America.

The Monetary Policy Committee (MPC) is set to announce the interest rate decision on January 30, 2025.

In November, the South African Reserve Bank (SARB) cut the interest rate by 25 basis points.

The interest rate fell from 8% to 7.75%. This meant that the prime lending rate dropped from 11.5% to 11.25%.

The bank said that the MPC will most likely cut interest rates by another 25 basis points (bps) this January but added that there is very little chance we will see another cut this year.

If these analysts are correct, then South Africa’s interest rate will be 7.50% and the prime lending rate will be 11%.

Sub-Saharan Africa Economist for Bank of America Global Research, Tatonga Rusike noted that like most emerging economies, South Africa will take its cue from the US Federal Reserve.

Rusike said that the US is unlikely to cut interest rates in 2025, as President Donald Trump begins his second term in office.

Investec's chief economist, Annabel Bishop also affirmed the Bank of America's prediction and agreed that the MPC will cut interest rates by 25 basis points (bps) this month.

Strong GDP growth may help lift SA out of junk status

The bank also noted that if South Africa shows higher GDP growth in 2025 and makes strides in lowering the debt burden, the country could move up two notches in its credit rating, placing it on the cusp of getting out of junk status.

Rusike said that if South Africa provides “stronger GDP prints, then S&P (Standard & Poor) can review again in November 2025 and into 2026 to get rating upgrades”.

“So, we do see that the next three years if we do deliver on GDP growth and debt declining, it is possible to get up two notches in three years,” he explained.

“Growth of at least 1.5% of GDP on an annual basis over the medium term is good enough,” he added.

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