Interest rate cuts will attract investors to SA: Economist

SARB Governor Lesetja Kganyago announces interest rates in Pretoria on January 30, 2025.

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Independent Economist Elize Kruger says further interest rate cuts would attract investors to the country and boost economic growth.

Her comments come after the South African Reserve Bank’s (SARB) reduction of the repo rate by another 25 basis points to 7.5%, bringing the prime lending rate down to 11%.

The rate cut is the third since September last year.

This is the first time the prime lending rate is at this level since May 2023.

Kruger says, “Debt levels in South Africa are already unsustainably high so we can’t look at the fiscal side to stimulate the economy but on the monetary side. I believe there’s still a bit of room and I wish that we can look into that direction.”

She says, “That will in the bigger picture assist investment projects once you lower the cost of capital. There are more projects that become viable, that could start to grow the economy, that could create more jobs. We need to have almost all guns shooting in the direction of growth because that could lead to more jobs.”