South Africa’s inflation rate fell to the lowest level in three years, supporting the case for monetary policy easing this quarter. 

Consumer prices rose 4.6% in July from a year earlier, compared with 5.1% in June, Statistics South Africa said in a statement on its website on Wednesday.

That’s the lowest level since July 2021 and was below the 4.8% median of 16 economists’ estimates in a Bloomberg survey.

The South African Reserve Bank seeks to stabilize inflation and price-growth expectations at 4.5%, the midpoint of its target range. 

The slowdown may sway policymakers to lower borrowing costs on Sept. 19. The monetary policy committee held the benchmark interest rate at 8.25% at its last meeting, but the decision wasn’t unanimous — four panellists voted for the unchanged stance, and two favoured a 25 basis-point reduction. 

The central bank’s policy stance was “appropriate given the inflation risks,” Governor Lesetja Kganyago said at the time. 

A stronger rand, partly buoyed by South Africa’s new business-friendly coalition government, is likely to reduce risks to the inflation outlook and support the case for domestic monetary policy easing.

The outlook for the local currency may improve if the Federal Reserve cuts US interest rates.