South African interest rates, which have been stuck at a 14-year high since May, should be in a downward cycle by the second half of next year, giving beleaguered consumers some much-needed relief, according to economists.

It was always going to hurt when interest rates started to climb again after the abnormally low levels seen during the worst of the Covid-19 years, but the inexorable rise to 8.25% in May from 3.5% in September 2021 was brutal for those who had debt repayments to service. The decline in annual consumer inflation to 5.5% in November from 5.9% in October – its first contraction since July – helped to convince economists that the SA Reserve Bank (SARB) will at last be able to ease off next year.

“The inflation outlook is favourable over the medium term, and this will give the SARB room to lower lending rates in the second half of 2024 and in 2025. We expect around 75 basis points of cuts as a baseline view,” said Christie Viljoen, economist and senior manager at PwC in SA.