The South African Reserve Bank’s Monetary Policy Committee (MPC) unanimously raised the policy rate by 25 basis points to 7.25% in September, effective 25 September, citing an intensified fuel-price shock, higher global interest rates and upside inflation risks despite weaker growth. Over the past year, the MPC cut the rate by 25 basis points to 6.75% in November 2025, held through March, raised it by 25 basis points to 7% in May and held in July. Headline inflation is 4.4% and is expected to exceed 5% later in 2026 and early 2027 before returning to around the 3% target toward end-2027, while elevated services inflation and above-target expectations increase second-round risks. The economy contracted by 0.2% in the second quarter, although the central bank expects a second-half rebound and projects annual growth of 1.2%, with risks skewed down. The rand remained notably resilient, helping contain import prices. Escalating Middle East and Russia-Ukraine conflicts have disrupted oil, refinery and food supplies, creating a persistent global supply shock as major central banks raise rates and longer-term yields climb. The Quarterly Projection Model indicates a broadly stable policy rate through the rest of 2026 and cuts later as inflation falls, but the path remains a guide and the MPC will continue to decide meeting by meeting and act as needed to return inflation to 3%.
2026-09-23South African Reserve Bank
South African Reserve Bank Raises Policy Rate by 25 Basis Points to 7.25%
The South African Reserve Bank’s Monetary Policy Committee unanimously raised the policy rate by 25 basis points to 7.25%, effective 25 September, citing fuel-price shocks, higher global interest rates and upside inflation risks. Inflation is expected to exceed 5% later in 2026 and early 2027 before returning toward the 3% target by end-2027, while 2026 growth is projected at 1.2% with downside risks.