The South African Reserve Bank’s Monetary Policy Committee raised the policy (repo) rate by 25 bp to 7.00 % with effect from 29 May, as four of six members judged that intensifying upside risks from costlier oil, a record 11.4 % jump in April fuel prices and emerging second-round pressures warranted a pre-emptive move to secure the 3 % inflation target. Following a 25 bp cut to 6.75 % in November 2025 and two holds, the rate now returns to its mid-2025 level. No changes were announced to operational features of the policy corridor. Headline CPI quickened to 4.0 % in April from 3.1 %, and the SARB now projects 4.4 % average inflation in 2026 and 3.7 % in 2027, before converging to target in 2028; growth forecasts for the next two years have been marked down amid weaker investment and consumption, with recent floods adding to downside risks. The rand remains firmer than a year ago and elevated export prices are supporting favourable terms of trade, though food and fuel costs are expected to re-accelerate. Globally, the protracted closure of the Strait of Hormuz has kept oil near USD 100, pulled growth forecasts lower and lifted bond yields, leaving major central banks on hold. The SARB’s Quarterly Projection Model implies only this one additional hike before a gradual easing cycle as inflation recedes, but the MPC stressed decisions will stay data-dependent and that more tightening could follow under adverse oil, food or currency scenarios.
South African Reserve Bank2026-05-28
South African Reserve Bank raises policy (repo) rate by 25 bp to 7.00%
South African Reserve Bank’s Monetary Policy Committee lifted the policy (repo) rate by 25 bp to 7.00 % effective 29 May, with four of six members citing rising oil and fuel prices and second-round inflation risks. The Quarterly Projection Model points to no further increases before a gradual easing, but the committee warned it could tighten again if oil, food or rand dynamics worsen.