Announcing a 25 basis point increase in the repo rate to 7%, SARB Governor Lesetja Kganyago said the MPC was responding to growing risks posed by the prolonged Middle East conflict.
The South African Reserve Bank (SARB) has issued a stern warning that additional interest rate hikes may be on the horizon as inflation pressures threaten to escalate.
Following a 25 basis point increase in the repo rate to 7%, SARB Governor Lesetja Kganyago outlined significant risk scenarios that could propel inflation above the critical 6% mark, compelling policymakers to resort to further monetary tightening.
In a climate marked by the ongoing conflict in the Middle East, surging fuel and food prices, and potential second-round inflation effects, the Monetary Policy Committee (MPC) acted decisively. This latest increase elevates the prime lending rate to 10.5% and reflects the central bank's proactive stance in mitigating growing risks.
Kganyago noted a troubling decline in the economic outlook since the MPC's previous meeting. The bank now anticipates headline inflation to average 4.4% in 2026, rising from a forecast of 3.7% next year before targeting the desired 3% mark by 2028.
