The South African Reserve Bank’s Monetary Policy Committee has kept the repo rate unchanged at 6.75%.
This was announced by Reserve Bank Governor, Lesetja Kganyago on Thursday.
The prime lending rate will also stay steady at 10.25%.
“Two members [of the MPC] favoured a cut of 25 basis points, while four preferred a hold.
“The Quarterly Projection Model continues to forecast gradual rate cuts as inflation subsides. The model interprets the policy stance as moderately restrictive currently, with rates reaching neutral levels during 2027.
“As before, this rate path remains a broad policy guide. Our decisions will continue to be taken on a meeting-by-meeting basis, with careful attention to the outlook, data outcomes, and the balance of risks to the forecast,” he said.
Kganyago added that South Africa’s economic growth “looks steadier”, noting that there has been expansion for four quarters – with available data suggesting that “it grew further in the most recent quarter”.
“This would mark the longest unbroken growth phase since 2018. The main growth driver has been household consumption, up by more than 3% last year, compared to an estimated 1.3% for the overall economy.
“Unfortunately, investment has been weak, contracting during the first half of 2025. However, the third-quarter data showed a rebound. We hope this investment recovery will be sustained, allowing the economy to achieve structurally higher growth.
“Our forecasts continue to show growth moving somewhat higher, approaching 2% over the medium term. We see some upside risks to these projections,” he said.
Inflation came in higher towards the end of 2025 at 3.6% in December but is expected to slow.
“Indeed, our near-term inflation forecast has fallen, with the rand stronger and a lower oil price assumption.
“We are, however, keeping an eye on food inflation, especially meat prices, which are being affected by a serious outbreak of foot and mouth disease. We are also concerned about electricity prices, given that NERSA’s price correction may rise from R54 billion to R76 billion.
“More positively, inflation expectations have fallen, with the latest survey showing longer-term expectations at record lows. We look forward to expectations declining further, as South Africans experience ongoing lower inflation and learn more about the new target,” Kganyago noted.
He described the past year as a “watershed year for the South African economy”.
“Despite a volatile global backdrop, there was significant progress on domestic reforms, including a new inflation target. These efforts have been rewarded with lower borrowing costs, a rapid decline in inflation expectations, and steadier growth.
“It is crucial to sustain this progress. For monetary policy, our main contribution is to deliver on the new target, which means stabilising inflation at 3% over the next few years.
“Further gains in economic performance would come from reaching a prudent public debt level, lowering administered price inflation, and continuing structural reforms that raise potential growth,” Kganyago concluded. – SAnews.gov.za
