The South African Reserve Bank (SARB) raised interest rates for the second time this year on Wednesday (23 September), saying that the conflict in the Middle East had triggered large and persistent price shocks and that tighter monetary policy was needed to prevent higher inflation from becoming entrenched.
The Monetary Policy Committee (MPC) unanimously decided to increase the policy rate by 25 basis points to 7.25%, effective from 25 September. The decision was in line with the average forecast of economists surveyed by Reuters.
The decision comes amid higher interest rates at several major central banks, including the US Federal Reserve, the European Central Bank and the Bank of Japan, against a backdrop of escalating geopolitical tensions.
“South Africa’s growth recovery has slowed, while inflation has increased well above our target,” SARB Governor Lesetja Kganyago said at a press conference.
Kganyago stressed the importance of bringing inflation back towards the central bank’s 3% target as fuel-price pressures intensify. Official data showed headline inflation rising slightly to 4.4% in August.
Global shocks put pressure on economy
The SARB revised upwards its short-term inflation forecasts and lowered its economic growth forecast for this year from 1.4% to 1.2%. The central bank now expects inflation to rise above 5% later this year and early next year, before returning to around 3% towards the end of 2027.
“Global shocks are clearly hurting our economy,” Kganyago said, adding that services inflation remains a concern. By contrast, food inflation has remained relatively contained, while the rand has remained resilient, helping to limit import-price pressures.
“Measured and proportionate”
According to Kganyago, MPC members considered both keeping rates unchanged and raising them by 50 basis points before opting for a 25-basis-point increase.
“We have taken a measured approach to rate setting,” the governor said, stressing that the policy response was intended to be proportionate to the inflationary shock facing the economy.
The SARB’s next monetary policy meeting is scheduled for 19 November 2026.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/24/mundo/africa/africa-do-sul-sarb-sobe-juros-para-725-e-alerta-para-pressao-inflacionista/
