(Bloomberg) -- South African inflation expectations declined for the next two years, providing the central bank with welcome news ahead of its policy meeting next week though it probably won’t be enough to tempt it to cut interest rates.

Average inflation expectations for this year dropped to 5.4% in the first quarter of 2024, from 5.7% previously, according to a survey released on Tuesday by the Stellenbosch-based Bureau for Economic Research.

The rate of price growth for 2025 is now seen declining to 5.3% from 5.6% and to 5.2% in 2026, according to participants in the poll of analysts, business people, labor unions and households.

Read More: SOUTH AFRICA PREVIEW: Food Gains to Halt Move Toward Target

The survey results will inform the policy debate at the South African Reserve Bank’s monetary policy committee meeting next week, though analysts expect it to keep interest rates on hold at 8.25% when it announces its decision on March 27.

The bank aims to anchor inflation expectations at the 4.5% midpoint of its target range. The headline inflation rate and expectations have been above that level since 2021.

South Africa’s inflation rate rose for the first time in three months in January on the back of higher fuel prices. Consumer prices climbed 5.3% from a year earlier, compared with 5.1% in December.

February data is scheduled to be released on Wednesday. Economists surveyed by Bloomberg expect it to advance to 5.5%.

Governor Lesetja Kganyago has repeatedly said that only when inflation is on a downward trajectory toward the midpoint will the MPC loosen monetary policy.

“The task of taming inflation is not yet done,” Kganyago said in an interview with Bloomberg at the end of last month. “Until that is done, I don’t see why there should be a change in the monetary stance.”

Forward-rate agreements starting in a month — used to speculate on borrowing costs — have canceled out any chance of a rate cut at the March meeting, and are pricing in a less than 10% chance of a 25 basis point rate hike. Trades were pricing in about a 20% chance of a 25 basis point cut last week.

The three social groups expect the prime overdraft rate of commercial banks will drop by 50 basis points 11.25% at the end of 2024, the BER said.

“This is somewhat higher than they expected previously,” the BER said. “It also contrasts their view of slightly lower inflation this year. Next year, the respondents foresee that the SARB will continue to reduce interest rates by another 50 basis points so that the prime rate will reach 10.75% at the end of 2025.”

--With assistance from Colleen Goko.

(Updates with more details. A previous version corrected the forecast for 2024 and 2025 in second paragraph)

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