Rate cut set to lift economy into 2026, says FNB

Following the South African Reserve Bank’s Monetary Policy Committee’s (SARB MPC) decision earlier today to cut its repo rate by 25bps, FNB confirms it will reduce its lending rate on prime-linked accounts by 0.25% to 10.25%. The new rate will take effect from Friday, 21 November 2025.

“We welcome the Reserve Bank’s decision to further cut the interest rate, as this will further lift consumer and business confidence. While inflationary pressures persist 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.  The lower borrowing costs continue to provide relief for consumers, but it’s equally important for them to use this period wisely to manage debt and build up savings where possible” says FNB CEO Harry Kellan.

“After a year of modest growth, several sectors are also beginning to show encouraging signs of improvement. South Africa’s hosting of the G20 Summit has also drawn international investor interest in Africa, further strengthening the outlook for local business,” explains Kellan.

Recently, South Africa has received positive affirmations with removal of Grey Listing and rating upgrade, but there is still work to be done. Subsequently, the National Treasury tabled the 2025 Medium-Term Budget Policy Statement (MTBPS), outlining progress on reforms and the fiscal outlook. A key highlight was the endorsement of a 3% inflation target with a 1 percentage point tolerance band. This aligns South Africa with leading emerging markets and aims to achieve the target by 2027, reinforcing policy certainty and supporting sustainable growth.

Mamello Matikinca-Ngwenya, FNB Chief Economist, adds, “Economic conditions remain ripe for continued easing of monetary policy. Headline inflation is subdued, and only marginally above the new preferred target of 3%, while signs of economic slack prevail as demand-driven inflation has failed to normalise at the pace anticipated at the start of the year. Therefore, this further ease in borrowing costs will push confidence and willingness to spend in the right direction.

That said, the MPC remains focused on future inflation as such we don’t foresee any aggressive cuts in the near term. The exact level of the further monetary policy restriction is debatable, but a speedy adoption of the new target and anchoring of expectations will be less costly to economic growth. As the MPC receives more indications that their communication, credibility, and restrictive policy are effective, policy rates will be reduced further. Moreover, the employment of currently constrained latent capacity will not only improve economic potential but also reduce the cost of doing business. We look forward to the success of all these ongoing reforms as well as the lower borrowing costs that they will usher in.”

Kellan highlights that consumers should consider maintaining their repayments at present levels, if their budgets allow, rather than reducing them in line with lower interest rates. “The saving on interest costs over the term of the home loan will be significant. Using the Nav»Money tool, available on the FNB Banking App, customers can track spending, manage budgets, monitor credit health, and plan on their savings. This will make it easier to stay financially resilient,” he concludes