{"id":866612,"date":"2026-07-17T13:00:00","date_gmt":"2026-07-17T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=866612"},"modified":"2026-07-17T12:25:21","modified_gmt":"2026-07-17T10:25:21","slug":"hope-for-interest-rates-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/866612\/hope-for-interest-rates-in-south-africa\/","title":{"rendered":"Hope for interest rates in South Africa"},"content":{"rendered":"\n

PSG Financial Services Chief Economist Johann Els believes that the South African Reserve Bank (SARB) will keep interest rates unchanged when it meets next week, but it will likely be a tight call.<\/p>\n\n\n\n

Statistics South Africa (Stats SA) will release the June CPI inflation figure on Wednesday, 22 July, with the Monetary Policy Committee (MPC) announcing their latest interest rate decision the next day. <\/p>\n\n\n\n

Inflation in South Africa has skyrocketed following the US’s war with Iran, with the ceasefire failing to hold. <\/p>\n\n\n\n

The heightened inflation outlook has led the Bank of America <\/a>to expect a hike in South Africa next week, bringing the repo rate to 7.25% and prime to 10.75%. <\/p>\n\n\n\n

Els believes that headline inflation will rise from 4.5% in May to around 4.7% in June, which will reflect a monthly increase of roughly 0.5%. <\/p>\n\n\n\n

This is well above the MPC’s 3% target, with the largest impact on the higher inflation figure being rising fuel prices caused by the Iran war. <\/p>\n\n\n\n

“While 4.7% is obviously higher than the Reserve Bank would like to see, it’s important to remember that most of this increase is being driven by fuel prices,” said Els. <\/p>\n\n\n\n

“There is still very little evidence of meaningful second-round inflation effects. I expect inflation to ease back to around 4.3% in July, remain around that level in August, and then drift towards 4.0% by year-end.” <\/p>\n\n\n\n

He expects inflation to be around 4.0% for all of 2026, before easing to around 3.5% in 2027. The June figure is unlikely to sway the MPC, which would have completed its own forecasts ahead of the release. <\/p>\n\n\n\n

Els said that the Reserve Bank’s early and pre-emptive 25 basis point rate hike in May would make it unlikely that the MPC would need to raise rates again in July. <\/p>\n\n\n\n

However, he admitted that the renewed conflict in the Middle East over the last week and the increase in oil prices have made the call difficult. <\/p>\n\n\n\n

This makes the case for another rate hike, as oil prices have risen back to around $85 per barrel, while inflation expectations for Q2 2026 have also risen sharply. Fuel under-recoveries have also widened. <\/p>\n\n\n\n

A hold is still on<\/h2>\n\n\n
\n
\"\"<\/a>
PSG Financial Services Chief Economist Johann Els<\/figcaption><\/figure><\/div>\n\n\n

“On the other hand, there are also good reasons to leave interest rates unchanged. The inflation expectations survey was conducted when oil prices were above $100 per barrel,” said Els. <\/p>\n\n\n\n

“Even after the recent increase, oil prices remain well below those levels, suggesting the survey probably overstates current inflation risks.” <\/p>\n\n\n\n

He expects Q3 inflation expectations to dip again, depending on how the renewed war unfolds. More importantly, he noted that the MPC acted proactively in May, with no further tightening needed. <\/p>\n\n\n\n

Many other central banks have not hiked rates, with the rand exchange rate remaining incredibly stable, which has eased some of the potential inflationary pressures. <\/p>\n\n\n\n

Little evidence also supports that higher fuel prices are feeding into broader inflation, while wage settlements in Q2 appeared largely unchanged. <\/p>\n\n\n\n

“Overall, I think this will be a very close call – closer than I expected before the renewed conflict in the Middle East,” said Els. <\/p>\n\n\n\n

“I also expect quite a divided MPC vote, with some members favouring another rate hike while others argue that the May increase was sufficient.” <\/p>\n\n\n\n

For now, he believes that the MPC will keep rates unchanged despite the return to conflict in the Middle East. <\/p>\n\n\n\n

Looking beyond July, I still believe the inflation outlook is improving, with inflation gradually easing towards the end of the year as the effects of the earlier oil shock fade.<\/p>\n","protected":false},"excerpt":{"rendered":"

PSG Financial Services Chief Economist Johann Els is optimistic that interest rates will remain unchanged when the Monetary Policy Committee meets.<\/p>\n","protected":false},"author":95,"featured_media":858290,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2078072478434238531","_sma_x_attempts":1,"footnotes":""},"categories":[9872],"tags":[23466],"class_list":["post-866612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-psg-financial-services"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866612","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=866612"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866612\/revisions"}],"predecessor-version":[{"id":866629,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866612\/revisions\/866629"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/858290"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=866612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=866612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=866612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}