South Africa’s central bank unexpectedly left its benchmark interest rate unchanged on Thursday, defying market expectations for another increase as policymakers sought to balance rising inflation risks against a fragile economic recovery.
The South African Reserve Bank (SARB) kept its repo rate at seven percent, with its six-member Monetary Policy Committee voting 4-2 in favour of holding rates. The decision surprised markets, with only three of the 20 economists surveyed by Bloomberg forecasting a pause, while the majority expected a 25-basis-point hike.
The hold follows a 25-basis-point increase in May—the country’s first rate hike since 2023—and highlights the SARB’s increasingly cautious approach as renewed conflict involving the United States, Israel and Iran clouds the global economic outlook.
Governor Lesetja Kganyago said the committee judged the current policy stance to be sufficiently restrictive despite heightened inflation risks.
“The committee agreed that the outlook is uncertain, and with the rate increase at our previous meeting, the policy stance is appropriate for now, with rates somewhat restrictive,” Kganyago said.
