Good news for motorists financing their cars in South Africa

The South African Reserve Bank’s (SARB) Monetary Policy Committee has elected not to increase interest rates during its bi-monthly meeting today, 20 March 2025.

This comes as market conditions improved and inflation stayed within the SARB’s target range of 3-6% over the last two months.

The decision keeps the repo rate at 7.50% and the prime lending rate at 11.00%.

For motorists financing their cars on a linked interest rate contract, it means there will be no changes to their monthly dues come April.

This is what owners can expect to pay on their vehicle finance agreement for the next two months at least, depending on the value of their wheels:

Looking ahead

The decision to keep interest rates unchanged after three consecutive cuts was taken against the backdrop of a highly volatile economic landscape.

“The world economy is experiencing extreme levels of uncertainty. Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly,” said the SARB.

Germany has set out plans for large investments in security and infrastructure, which are likely to lift European growth.

Meanwhile, China has announced new stimulus measures to bolster demand.

In the United States, the year started with surging stock prices and a stronger dollar. More recently, however, the disruptive effects of tariffs and policy uncertainty have negatively impacted growth, the value of the dollar, as well as stock markets have given up recent gains.

Inflation in advanced economies remains elevated, with both headline and core above 2% in the United States, the Euro area, the United Kingdom, and even Japan.

“Some policy adjustments by major central banks are still expected this year, but rates are likely to remain high for longer, given new inflation risks,” said the SARB.

Turning to South Africa, growth picked up in the fourth quarter of last year, led by increased spending in the household sector courtesy of lower inflation and withdrawals from the Two-Pot pension system.

However, the overall growth picture was disappointing, with other sectors showing weakness. Growth for 2024 as a whole was 0.6%, marginally below the SARB’s expectations and slightly worse than in 2023.

“In these circumstances, the global economic outlook is unpredictable,” said the SARB.

Looking ahead, the forecast sees rates stabilising at a neutral level of about 7.25% this year, which indicates that another 0.25 basis point hike should be coming.

However, this rate path from the Quarterly Projection Model remains a broad policy guide, the SARB warned.

The final decision will be based on changing market conditions and is made on a meeting-by-meeting basis, it said.