The South African Reserve Bank raised its repo rate by 25 basis points to 7.25%, effective 25 September. All members of the Monetary Policy Committee supported the increase. Headline inflation was 4.4% in August, above the central bank's 3% target, and the SARB expects it to rise above 5% later in 2026 and early 2027.
The increase was the second tightening move of 2026. It came despite a 0.2% contraction in gross domestic product during the second quarter. The central bank cut its 2026 growth forecast to 1.2% from 1.4%.
INFLATION OUTWEIGHS WEAK GROWTH
The MPC said geopolitical events amounted to a large, negative and persistent global supply shock, creating inflationary pressure.
The increase lifts the prime lending rate to 10.75%, raising repayments on variable-rate loans.
INFLATION OUTLOOK
The SARB projects inflation returning to around 3% towards the end of 2027.
The Monetary Policy Committee's next decision, its last of 2026, is due in November.