The South African central bank has decided to stop reducing interest rates temporarily to evaluate the potential impact of US President Donald Trump's trade policies on inflation. This decision was announced by Governor Lesetja Kganyago during a press briefing near Johannesburg. The bank maintained the benchmark interest rate at 7.5%, aligning with the expectations of most economists.

The decision followed three consecutive interest rate cuts initiated in September and aligns with a similar move by the Federal Reserve. The uncertainty in the global economy, especially due to escalating trade tensions and geopolitical changes, has made predicting the economic outlook challenging. This unpredictability influenced the monetary policy committee's choice to hold rates steady.

Although market indicators like the rand and bond yields responded to the announcement, the benchmark stock index continued to decline. Despite expectations of a rate cut due to steady inflation figures, concerns over Trump's trade measures and rhetoric influenced the central bank's decision.

Trump's actions, including withholding aid to South Africa and expelling its ambassador over disagreements, have added to the economic uncertainties faced by the country. Analysts like Razia Khan noted that while there were expectations for a rate cut, the risks were finely balanced, considering the ongoing global uncertainties. The South African Reserve Bank's cautious approach reflects the need to assess future global scenarios before considering further easing measures.