South Africa’s central bank lowered its key interest rate by a quarter percentage point to 7.75% on Thursday.
This follows a drop in inflation to a two-year low of 2.8% in October.
Governor Lesetja Kganyago said inflation is controlled in the short term, but warned of potential risks like rising food and energy costs.
Despite subdued manufacturing, strong mining activity and a slight decline in unemployment offered some positive signs.
Kganyago predicted higher economic growth in the coming year due to ongoing reforms.
However, the bank maintained a cautious approach due to uncertainties.
Potential global interest rate hikes and a weakening South African Rand raise concerns.
Kganyago pointed to higher inflation in the US and UK, coupled with the unknown economic policies of the incoming Trump administration in the US.
He also expressed concerns about rising protectionism around the world, potentially impacting global trade.