SARB raises interest rate to 7.25%

The South African Reserve Bank (SARB) has increased the policy rate from 7% to 7.25%, with the new rate taking effect on 25 September 2026.

The decision was announced by SARB Governor Lesetja Kganyago following the September meeting of the Monetary Policy Committee (MPC) on Wednesday.

“The MPC decides to increase the policy rate by 25 basis points, with effect from 25 September. The decision was unanimous,” Kganyago said.

The latest increase follows the MPC’s previous decision to keep the policy rate at 7% in July. The Reserve Bank has been responding to inflation risks linked to rising fuel prices and persistent services inflation.

According to the SARB’s September MPC summary, fuel prices are rising again while services inflation remains elevated. Food inflation, however, is at its lowest level since 2010, supported by strong harvests and more stable meat prices.

The central bank said inflation is expected to remain elevated into 2027, largely driven by fuel and services inflation, before returning to the 3% target towards the end of 2027.

The SARB also revised South Africa’s annual economic growth forecast to 1.2%, down from 1.4%, after the economy contracted in the second quarter.

The MPC’s latest decision comes amid a challenging global environment, with disruptions to supply chains linked to conflicts in the Middle East and the Russia-Ukraine war adding to inflationary pressures.

The SARB has reiterated that its monetary policy framework is focused on maintaining low and stable inflation while supporting balanced and sustainable economic growth.