The South African Reserve Bank’s Monetary Policy Committee (MPC) opted to keep the repo rate unchanged at 7% following its September meeting, marking the first pause since July. The prime lending rate remains at 10.5%.
The decision was a close call, with four members voting to hold rates and two in favour of a 25 basis point cut. Governor Lesetja Kganyago said the pause allows the Bank to assess the effects of the 125 basis points in cuts delivered over the past year.
Economic data offered a mixed backdrop. GDP surprised to the upside in Q2, prompting the Bank to raise its 2025 growth forecast to 1.2% from 0.9%. However, inflation remains a concern, with headline CPI expected to average 3.4% this year and 3.6% in 2026 before returning to the Bank’s new preferred target of 3% in 2027.
Kganyago noted that while inflation cooled to 3.3% in August, structural risks such as higher electricity tariffs and dysfunctional administered prices continue to weigh on the outlook. “The solution to this crisis is not higher inflation, but rather sector-specific reforms to improve efficiency,” he said.
Analysts were split ahead of the announcement, with some arguing that a modest cut could have provided stimulus to the struggling economy. Still, the SARB has emphasised its commitment to anchoring inflation expectations closer to 3%—the lower bound of its official 3–6% target range.
For households and businesses, the decision means borrowing costs will remain steady. Monthly repayments on mortgages, vehicle finance, and other loans linked to prime will stay unchanged for now.
