South Africa’s central bank raised its benchmark interest rate for the first time since 2023 on Thursday, tightening monetary policy as rising fuel costs and escalating geopolitical tensions pushed inflation higher.
The South African Reserve Bank (SARB) increased its key repo rate by 25 basis points to 7 percent, saying the move was necessary to contain inflation risks and steer price growth back toward its target range.
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The decision was widely expected by economists polled by Reuters after inflation accelerated sharply in April. Annual consumer inflation rose to 4.0 percent from 3.1 percent in March, driven largely by higher fuel prices linked to the ongoing United States-Israel conflict with Iran, which has disrupted global energy markets and lifted crude oil prices.
The rate increase marks South Africa’s first upward adjustment in borrowing costs since 2023 and signals growing concern among policymakers that imported inflation pressures could become more entrenched if oil prices remain elevated.
