The South African Reserve Bank’s Monetary Policy Committee has voted unanimously to hold the benchmark repo rate at 7.50% per annum, ending a brief easing cycle that had seen two quarter-point cuts in late 2025 and early 2026. Governor Lesetja Kganyago cited the dramatic deterioration in the near-term inflation outlook — driven primarily by record fuel price increases and the pass-through effects on food and transport costs — as the primary reason for the pause.
The decision was broadly in line with market expectations, which had shifted decisively toward a hold following the announcement of the April 2026 fuel price adjustment. The prime lending rate accordingly remains at 11%, providing some relief to existing borrowers but dashing hopes of households with variable-rate mortgages and vehicle finance agreements who had been anticipating further reductions.
Kganyago acknowledged that the economy’s underlying growth trajectory remains fragile and that the committee is aware of the negative demand implications of the rate hold. However, he emphasised that the MPC’s primary mandate is price stability and that allowing inflation expectations to become unanchored in the face of supply-side shocks would create more severe economic costs over the medium term.
The governor also flagged international risks to the South African economy, including the global trade policy uncertainty stemming from renewed protectionism in major economies and the continued volatility of emerging market capital flows. South Africa’s current account position has improved but remains vulnerable to sudden reversals in investor sentiment.
The next MPC meeting is scheduled for late May 2026, by which time the committee will have access to the April CPI data and a clearer picture of whether the fuel price shock is feeding through to broader inflation expectations or remaining contained as a once-off supply disruption.
