{"id":853149,"date":"2026-03-06T16:00:00","date_gmt":"2026-03-06T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=853149"},"modified":"2026-03-06T14:53:26","modified_gmt":"2026-03-06T12:53:26","slug":"bad-news-for-interest-rate-cuts-in-south-africa-this-month","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/853149\/bad-news-for-interest-rate-cuts-in-south-africa-this-month\/","title":{"rendered":"Bad news for interest rate cuts in South Africa this month"},"content":{"rendered":"\n

The South African Reserve Bank (SARB) is now expected to keep rates on hold this month following violence in the Middle East, with oil prices already spiking. <\/p>\n\n\n\n

The SARB’s Monetary Policy Committee (MPC) meets at the end of the month to decide on interest rates. <\/p>\n\n\n\n

At the start of the year, the MPC was widely expected to cut interest rates in March and September 2026. This was based on the assumption that inflation would remain around 3%. <\/p>\n\n\n\n

However, Israel and America’s attacks on Iran this last week placed massive fears on global oil and food prices. <\/p>\n\n\n\n

Investec Chief Economist Annabel Bishop said that if oil prices run between US$85\/bbl and US$90\/bbl for the remainder of this year, CPI would reach above 4.0%. <\/p>\n\n\n\n

This would exceed the SARB’s new 2% to 4% inflation tolerance band and delay a change in interest rates. <\/p>\n\n\n\n

Bishop said the rand is 2.5% weaker on a trade-weighted basis, while shipping costs have risen, pushing up fertiliser and oil prices.<\/p>\n\n\n\n

This has now led to concerns about a global food price shock, which would only intensify inflationary pressures. <\/p>\n\n\n\n

“The risks for inflation are skewed to the upside, and food is a key component of the CPI basket,” said Bishop. <\/p>\n\n\n\n

“Supply constraints for oil shipping are the main drivers of higher oil prices, despite production increases.” <\/p>\n\n\n\n

She noted that the SARB is likely to revise up its inflation rate forecasts at this month’s MPC if recently higher oil prices and rand weakness persist. <\/p>\n\n\n\n

The latest MPC meeting showed an oil price assumption of US$65\/bbl for this year and the next two.\u00a0<\/p>\n\n\n\n

“A price shock, from oil, food or both, would likely be looked through by the MPC if short-lived, and without second-round effects flowing into other prices, leaving interest rates unchanged,” said Bishop. <\/p>\n\n\n\n

“That is, the MPC will watch to see if the impact of higher oil prices on inflation is temporary, or is embedded, changing interest rates to prevent a more permanent move away from the 3.0% y\/y inflation target.” <\/p>\n\n\n\n

With uncertainty easing, financial markets have become risk-off, and oil prices have risen above US$85\/bbl.<\/p>\n\n\n\n

We would not expect such a large hike in the repo rate this month, as it is too early to estimate the effects of oil prices. <\/p>\n\n\n\n

Despite the risk in the upcoming meeting, the SARB is still expected to cut interest rates by 25 basis points in 2026, taking it to 6.5%. <\/p>\n\n\n

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The South African Reserve Bank is now expected to keep interest rates on hold this month following Israel and America’s attacks on Iran. <\/p>\n","protected":false},"author":95,"featured_media":828561,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[1498,4043],"class_list":["post-853149","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-investec","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/853149","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\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=853149"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/853149\/revisions"}],"predecessor-version":[{"id":853154,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/853149\/revisions\/853154"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/828561"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=853149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=853149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=853149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}