The South African Reserve Bank (SARB) raised its benchmark interest rate by 25 basis points to 7.25% on Wednesday, 23 September, marking the second increase this year. The decision was unanimous and in line with the average forecast of economists surveyed by Reuters.
The central bank justified the increase by pointing to the impact of the war in Iran, which triggered “large and sustained” price shocks, arguing that tighter monetary policy was needed to prevent high inflation from becoming entrenched.
Headline inflation reached 4.4% year-on-year in August, remaining above the SARB’s 3% target. Governor Lesetja Kganyago said it was crucial to bring inflation back to the target as recent pressure on fuel prices eases.
The decision comes amid interest rate increases by major central banks, including the US Federal Reserve, the European Central Bank and the Bank of Japan, against a backdrop of escalating tensions in the Middle East.
The SARB also revised its economic outlook as South Africa’s growth recovery loses momentum. The central bank expects inflation to exceed 5% this year.
Kganyago described the 25-basis-point increase as a measure proportionate to the inflationary risks facing the South African economy.
Source: Reuters
Original article: https://www.reuters.com/world/africa/south-africas-central-bank-raises-main-interest-rate-725-2026-09-23/
