South Africa Interest Rate

The South African Reserve Bank left its key repo rate unchanged at 7% on September 18, 2025, as widely anticipated, signaling caution amid global uncertainty while preparing to adopt a new 3% inflation target. The decision was not unanimous, with four members voting to keep rates unchanged and two favoring a 25-basis-point cut. Since September last year, rates have been reduced by 125 basis points, and policymakers said they are pausing to assess the impact on the economy, evolving expectations, and inflation risks. They observed that headline inflation has risen recently as expected and is projected to peak in the near term, averaging 3.4% in 2025 and 3.6% in 2026—slightly higher than the previous forecast—before easing back to 3% in 2027. Meanwhile, the 2025 growth forecast was raised to 1.2% from 0.9% after Q2 GDP exceeded expectations, with modest gains expected in the coming years, aided by structural reforms, despite export headwinds from higher tariffs.