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Inflation · Monetary Policy · Repo Rate · South Africa
The South African Reserve Bank (SARB) unanimously maintained its main repo rate at 6.75% on Thursday, continuing a pause in its rate-cutting cycle that began in September 2024, as it assesses the long-term economic impact of the war in Iran.
This decision follows a period where the SARB had reduced rates from a 15-year high of 8.25%. SARB Governor Lesetja Kganyago emphasized that the coming months are crucial for evaluating inflation consequences from the crisis.
South Africa's headline inflation was 3% in February, down from 3.5% in January, and averaged a 21-year low of 3.2% in 2025, aligning with the SARB's 3% target with a one-percentage-point tolerance band. GDP growth for 2025 was revised down to 1.1% from an earlier projection of 1.3%, while the 2026 growth forecast remains at 1.4%.
Kganyago highlighted South Africa's recent macroeconomic progress, including lower inflation, improved fiscal prospects, and steadier growth, asserting that prudent monetary policy will sustain these gains despite challenging global conditions.