South Africa set for interest rate relief

South African inflation eased in January, edging closer to the central bank’s 3% target, bolstering the case for an interest-rate cut when policymakers meet next month.

Consumer prices rose 3.5% year-on-year, compared with 3.6% a month earlier, Pretoria-based Statistics South Africa said in a statement on its website on Wednesday. The median estimate of 15 economists in a Bloomberg survey was 3.4%.

The outcome may encourage the central bank’s monetary policy committee to lower borrowing costs on March 26. The MPC left the benchmark rate unchanged at 6.75% last month because of concerns about global uncertainty and the risk that higher food and electricity prices may derail its revised 2026 inflation forecast of 3.3%.  

Meat prices have surged and are likely to remain elevated in the near term as South Africa battles an outbreak of foot-and-mouth disease in cattle, said Paul Makube, a senior agricultural economist at FirstRand’s First National Bank.

Of the 14 economists surveyed by Bloomberg this month, a majority expect policymakers to lower borrowing costs next month by 25 basis points.

Bolstering that view is the rand’s more than 3.7% gain against the dollar this year as gold and platinum — key exports — have rallied. In addition, oil prices are averaging about $61 a barrel, $4 less than the central bank’s 2026 assumption.