Debt relief for the holidays: Interest rate drop leaves more rands in your Christmas stocking
Lesetja Kganyago said the 20 November 2025 interest rate decision was unanimous.
Image: SA Reserve Bank.
South Africans with debt have reason to celebrate this afternoon as interest rates come down 0.25 percentage points, with immediate effect.
This drops, for example, the monthly repayment on a R2 million bond by R300.
The decision takes the prime lending rate down to 10.25%.
Economists had overall expected this cut.
Adriaan Grove, founder and MD at MyProperty, said “today’s rate cut delivered a welcome boost for new home buyers - lower borrowing costs immediately improve affordability and could help unlock much-needed activity in the real estate sector.
Grove added that this may be a small adjustment, but big news for first-time buyers.
Lesetja Kganyago, Governor of the South African Reserve Bank (SARB), speaking following the two-day meeting of the Monetary Policy Committee, the governor said that the decision was unanimous.
“Members agreed there was scope now to make the policy stance less restrictive, in the context of an improved inflation outlook,” he said.
Kganyago noted that inflation has accelerated “somewhat over the past few months”.
Yesterday, Statistics South Africa said the Consumer Price Index reached 3.6% for October up from 3.4% year-on-year as of September.
“This is higher than the 3% average for the first half of the year,” said Kganyago. He noted that the increase was mainly driven by non-core items: meat, vegetables, and fuel.
“We continue to see this pressure as temporary, with inflation heading lower again from the beginning of next year,” said Kganyago.
These downside surprises as well as a stronger rand have helped lower the inflation outlook, Kganyago said.
The rand dropped below R17 shortly after the mini budget before inching back up to reach R17.24 this afternoon,
Kganyago added that the downside was also bolstered by the 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,” said Kganyago.
The central bank is more optimistic than Finance Minister Enoch Godongwana when it comes to economic growth.
In his recent speech, the minister said that gross domestic product was expected to come in at 1.2% for the year.
Kganyago, however, believes that this figure will settle at 1.3%.
“Growth is looking steadier than last year,” Kganyago said. “We continue to see growth nearing 2% over the forecast horizon. Employment has also been rising,” he said.
Kganyago pointed to several factors, such as strong household spending, supported by wealth effects, further withdrawals from Two-Pot pension savings, and lower inflation and interest rates.
Yet, Kganyago said investment has disappointed, contracting further in the first half of the year.
“The risks to the growth outlook are assessed as balanced,” Kganyago said.
“We welcome the Reserve Bank’s decision to further cut the interest rate, as this will further lift consumer and business confidence,” said FNB CEO Harry Kellan.
Kellan noted that, while inflationary pressures persists from administered prices such as electricity and water, “ we are seeing stability and even falling prices in other key inflation drivers, notably the price of fuel”.