{"id":855225,"date":"2026-03-30T08:54:54","date_gmt":"2026-03-30T06:54:54","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=855225"},"modified":"2026-03-30T08:55:22","modified_gmt":"2026-03-30T06:55:22","slug":"fnb-sends-a-warning-about-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/855225\/fnb-sends-a-warning-about-south-africa\/","title":{"rendered":"FNB sends a warning about South Africa"},"content":{"rendered":"\n

FNB’s economists have warned that conflict in the Middle East could lead to higher interest rates and lower economic growth, just as South Africa was starting to turn the corner. <\/p>\n\n\n\n

The South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.75% at its March meeting. <\/p>\n\n\n\n

This was widely expected due to the war in the Middle East, which has led to a major increase in oil prices and weakened South African assets amid a rise in risk-on sentiment. <\/p>\n\n\n\n

FNB’s economists warned that the news flow around the war also remains discouraging. <\/p>\n\n\n\n

“While talks of a ceasefire have intermittently led to some oil price retreat, the language around the war remains concerningly escalatory and should sustain volatility,” said FNB. <\/p>\n\n\n\n

“The MPC\u2019s messaging highlights the uncertain operating environment, but the central bank is resolute on its inflation objective and could raise rates if the supply shock does not abate.” <\/p>\n\n\n\n

The latest MPC forecast sees inflation rising to 4.0% in 2Q26 and moving relatively sideways until 1Q27, before moving towards the new 3% target by the end of 2028. <\/p>\n\n\n\n

The key driver of this will be fuel prices, with petrol expected to increase by over R5 per litre in April, while diesel is set to increase by over R10 per litre. <\/p>\n\n\n\n

Although the SARB expects food inflation to be initially lower due to a softer starting point, pressure is expected to build in the latter part of the year and into 2027. <\/p>\n\n\n\n

The SARB’s forecasts also point towards modest upward pressure on core inflation, which reflects second-round effects such as public transport costs.<\/p>\n\n\n\n

While the SARB’s own predictions point to further increases, the MPC’s inflation risks remain tilted upwards.<\/p>\n\n\n\n

“Interestingly, the growth outlook remains unchanged as the lower 2025 base creates room for stronger growth this year and mitigates the impact of the shock,” said FNB. <\/p>\n\n\n\n

“That said, the MPC noted downside risk to growth as this shock is likely to weaken demand. Weaker demand should stem from lower confidence and softer disposable income \u2013 especially as the previously anticipated interest rate cuts are delayed.” <\/p>\n\n\n\n

The MPC also provided alternative higher-inflation scenarios, which included a longer conflict with further pressure on oil prices and the rand. These suggest interest rate hikes and lower growth. <\/p>\n\n\n\n

A blow for South Africa <\/h2>\n\n\n
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FNB said that the war is especially disheartening for South Africa, as the economy was expected to perform better in 2026. <\/p>\n\n\n\n

“Furthermore, we are yet to fully comprehend the impact over the longer term should investment decisions become less optimal.” <\/p>\n\n\n\n

“While we hope that this will not become a greater storm that derails our optimism, this decision to keep interest rates unchanged is firmly in line with a central bank committed to its mandate.”<\/p>\n\n\n\n

Morgan Stanley is less optimistic about South Africa, believing that the Reserve Bank is likely to go on the defensive against inflation and raise interest rates as soon as at its May meeting. <\/p>\n\n\n\n

\u201cWe now see a pre-emptive tightening cycle unfolding in the months ahead,\u201d Morgan Stanley economist Andrea Masia said. <\/p>\n\n\n\n

Masia pencilled in 25 basis-point rate hikes in May and July, taking the repo rate to 7.25%, before the SARB pauses and resumes easing in 2027.<\/p>\n\n\n\n

With reporting from Bloomberg<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

FNB’s economists have warned that the conflict in the Middle East could hurt South Africa’s economic recovery. <\/p>\n","protected":false},"author":95,"featured_media":845329,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[76,2890],"class_list":["post-855225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-fnb","tag-morgan-stanley"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/855225","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=855225"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/855225\/revisions"}],"predecessor-version":[{"id":855231,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/855225\/revisions\/855231"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/845329"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=855225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=855225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=855225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}