March 18 2025 09:05
Samuel Seeff, chairman of the Seeff Property Group
SOUTH AFRICA
The time to be bold with an interest rate cut, and to take advantage of the positives is now, chairman of the Seeff Property Group, Samuel Seeff said. It is imperative that the interest rate adjusts to the economic realities, he said.
Even with the current factors and challenges facing the country, conditions would be favourable for the Reserve Bank to take a bold stance and reduce the interest rate by 50bps this week, he said.
The Bank has a bearish reputation however and is more likely to cut rates by 25 basis points.
A big factor is that inflation has reduced dramatically to around 3.2% in January. It is well within, and near the bottom of the Reserve Bank’s target range of between 3% and 6%. This is also notably down from the 6% average in 2023, and the 4.4% average for 2024, according to Stats SA.
The global oil price has dropped around $70 per barrel, down since last year and trending below the expected rate. This will drive inflation down further, or at least keep it contained around the current level, therefore adding further impetus to the Bank to make a bold cut, said Seeff.
The Rand is stable, and after weakening slightly, it in fact strengthened over the weekend following the news that the Trump-administration had expelled SA’s ambassador.
Seeff said it is time to take advantage of the economic benefits which could flow from a lower interest rate. The gap between inflation and the interest rate is still too high, and the interest rate needs to be brought down further which would stimulate and increase activity in the property market, but most importantly, would be “a crucial incentive to stimulate economic growth, and with that job creation”.
The prime interest rate at 11% is a full 100 basis points higher compared with the pre-Covid rate in January 2020 when it was 10%, and brought down to 9.75% at end of January 2020, and subsequently down to 7%. Inflation is now down to 3.2% while it was at around 4.5% in January 2020.
“The need for a lower interest rate has become an economic imperative and there is a golden opportunity right now,” said Seeff.
While a 25bps cut would be welcomed, it would simply not be enough, according to Seeff.
“A bold cut of at least 50bps is needed,” he said.
247@propertyflash.co.za
