The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) has voted to hold rates, pausing the cutting cycle that started in September 2024.<\/p>\n\n\n\n
This keeps the repo rate at 7.50% and the prime lending rate at 11.00%.<\/p>\n\n\n\n
The vote was not unanimous, with four members voting to hold and two voting to cut by another 25 basis points.<\/p>\n\n\n\n
According to Reserve Bank governor Lesetja Kganyago, the world economy is experiencing extreme levels of uncertainty, with the outlook unpredictable.<\/p>\n\n\n\n
“Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly. In these circumstances, the global economic outlook is unpredictable,” he said.<\/p>\n\n\n\n
While local inflation appears to be contained\u2014with average headline inflation now projected at 3.6% this year and moving up to 4.5% in 2026\u2014the risk balance is to the upside.<\/p>\n\n\n\n
Low inflation for goods is likely to be temporary, he said, while headline inflation has edged higher over the past few months.<\/p>\n\n\n\n
Meanwhile, the risk for economic growth is to the downside.<\/p>\n\n\n\n
GDP growth in South Africa in 2024 was 0.6%, lower than expected and slightly worse than 2023. The 2025 growth forecast has been revised downward to 1.7%.<\/p>\n\n\n\n
These factors, and considering the global uncertainty, led to the decision to hold rates at 7.50%, with the implication being that there is room for another 25 basis point cut somewhere along the line.<\/p>\n\n\n\n
“As before, the forecast sees rates stabilising at a neutral level of about 7.25%<\/strong>. This rate path from the Quarterly Projection Model remains a broad policy guide,” Kganyago said.<\/p>\n\n\n\n The MPC said its decisions will be made on a meeting-by-meeting basis, and will continue to be outlook dependent, responsive to data developments, and sensitive to the balance of risks to the forecast.<\/p>\n\n\n\n The hold on rates was in line with most economists’ expectations, where experts saw the SARB taking a more cautious approach to monetary policy amid heightened uncertainty in global markets.<\/p>\n\n\n\n As echoed by the governor, global risks are viewed on the upside, driven predominantly by the threat of escalating trade wars by the United States.<\/p>\n\n\n\n “Given the uncertain global situation, the MPC spent time during this meeting exploring different external scenarios,” Kganyago said.<\/p>\n\n\n\n For one, the MPC considered a slowdown in the United States, with a weaker dollar and higher commodity prices, especially for gold. This implied some modest benefits for the South African economy.<\/p>\n\n\n\n On the other hand, the MPC explored scenarios built around changes in South Africa\u2019s access to US markets\u2014particularly if South Africa were to lose AGOA benefits.<\/p>\n\n\n\n Here, the committee factored in the weakening of exports and slightly lower growth. <\/p>\n\n\n\n “If that were compounded with tariffs on South African exports, the effects would be larger,” Kganyago said.<\/p>\n\n\n\n In the most severe scenario, the MPC considered a sentiment shock, with a weaker rand, higher domestic inflation and therefore a tighter policy stance. <\/p>\n\n\n\n In this case, growth would be lower by 0.7 percentage points (1.0% for 2025), with the exchange rate depreciation offsetting some of the tariff effects on exports.<\/p>\n\n\n\n “In a difficult global environment, it is vital to sustain domestic reforms that boost growth while preserving macroeconomic stability,” the governor said.<\/p>\n\n\n\n The hold on rates in South Africa follows a hold by the US Fed on Wednesday.<\/p>\n\n\n\n The Fed took a more neutral tone, but also indicated forward risk. Notably, US GDP growth is now expected to be weaker than projected in December\u2014down to 1.7% from 2.0% year-on-year.<\/p>\n\n\n\n These projections have been revised downward due to US trade and fiscal policy tightening and some uncertainty tied to the Trump administration’s tariff and trade war.<\/p>\n","protected":false},"excerpt":{"rendered":" The South African Reserve Bank has voted to put a hold on interest rates, as global market uncertainty sets in.<\/p>\n","protected":false},"author":10,"featured_media":816111,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[8927,4043],"class_list":["post-817786","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-lesetja-kganyago","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=817786"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817786\/revisions"}],"predecessor-version":[{"id":817796,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817786\/revisions\/817796"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/816111"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=817786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=817786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=817786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Uncertain times<\/h2>\n\n\n\n