Amid a deepening jobs crisis and sluggish economic growth, Samuel Seeff, chairman of the Seeff Property Group, has issued a call for the South African Reserve Bank (SARB) to slash interest rates by at least 50 basis points at its upcoming Monetary Policy Committee (MPC) meeting.
His appeal follows the release of bleak unemployment data, revealing that 237,000 more South Africans lost their jobs in the first quarter of 2025.
The official unemployment rate has now climbed to 32.9% – up from 31.9% – with 8.2 million people unemployed. Under the expanded definition, that number rises to 12.7 million, representing 43.1% of the workforce.
This troubling trend is occurring against the backdrop of repeated downgrades to South Africa’s economic outlook.
Both the International Monetary Fund (IMF) and ratings agency Moody’s have cut their 2025 growth projections to just 1%, following a mere 0.6% expansion in 2024.
“The continued economic stagnation and rising unemployment is simply untenable,” said Seeff.
He warned that the SARB’s cautious stance on inflation is no longer justified, particularly as consumer price inflation fell to 2.7% in March – well below the Bank’s 3%–6% target range.
“The risks to the stability of South Africa far outweigh the Reserve Bank’s overly cautious approach to inflation concerns, especially since inflation has trended around the bottom of the Reserve Bank’s target range since late last year, falling to just 2.7% for March. This is below the target range.”
Despite declining inflation, interest rates remain 100 basis points above pre-Covid levels. Seeff notes that this persistent rate gap is among the highest globally, making it increasingly difficult for businesses and households to thrive.
“It should be noted too that the gap between the interest rate and inflation in South Africa is among the highest in the world, stifling growth.”
Seeff argued that prolonged high interest rates have severely hampered economic activity and weighed heavily on the property market.
He said the prolonged period of high interest rates has demonstrably hampered economic growth and placed significant strain on the economy and property market.
The recent marginal rate cuts have now proven insufficient to stimulate meaningful recovery within the property market with FNB recently reporting that sales volumes are still below pre-pandemic levels.
While global central banks begin to pivot towards easing, the SARB has remained on hold. The Bank of England and European Central Bank recently trimmed rates by 25 basis points. Although the US Federal Reserve opted to keep its rate unchanged, signs of progress in US-China trade relations – including a temporary tariff relief deal – have brought renewed optimism.
“We have recently seen the Bank of England and the European Central Banks cut their rates by 25bps. While the US Fed kept its rates unchanged, that was expected given the impact of the US-China trade war.”
On this front too, progress has been made with recent meetings between the US and China and a temporary tariff relief deal “That means the Bank’s primary justification for maintaining high interest rates have now diminished,” Seeff said.
“Inflation is below the target range, the global economy is settling, VAT has been scrapped, and after some volatility, the rand has stabilised. There is therefore no reason for the Bank not to step in with a meaningful rate cut of at least 50bps. South Africa can no longer wait, the time for action is now.”
Some economists echo Seeff’s sentiment and predict that rate relief may come as soon as May, although the consensus is for a cut later in the year.
Annabel Bishop, chief economist at Investec, expects the SARB to begin cutting rates in July and November, by 25 basis points each. “With CPI inflation expected to be at the inflation target midpoint of 4.5% y/y over the next two years, the time period the Reserve Bank’s MPC targets, further cuts in the domestic interest rate cycle are expected.”
Bank of America (BofA) economists are more optimistic, projecting that South Africa may see two consecutive rate cuts – in May and July -due to improved global conditions and easing inflationary pressure.
Casey Sprake, economist at Anchor Capital, believes that falling oil prices—driven by increased OPEC production – could provide the SARB with enough room to begin cutting rates immediately.
“While the next move by the cartel remains difficult to predict, the current lower oil price environment is clearly beneficial for South Africa. Given oil’s significant weighting in the inflation basket, we expect headline inflation to remain subdued in the near term, providing some breathing room for monetary policy,” Sprake said.
“As a result, we anticipate a 25 basis point interest rate cut at the upcoming Monetary Policy Committee (MPC) meeting in late May, followed by an additional cut at the subsequent meeting. However, from July onwards, we expect inflation to begin edging higher again, largely due to base effects.”
Economists agree that the SARB will weigh several critical factors before making its next move.
South Africa’s inflation rate dropped to 2.7% in March 2025, the lowest level since June 2020. This has been attributed to falling fuel prices and a moderation in education costs.
The Reserve Bank has revised its 2025 growth forecast downward to 1.7%, citing weaker domestic demand and ongoing supply constraints.
While global uncertainties remain, recent stability in currency markets and reduced trade tensions – particularly between the US and China – may support a shift toward monetary easing.
A rate cut in May could signal a turning point – or missed opportunity—for South Africa’s economic recovery.
