South African Central Bank Holds Key Rate, Citing Need to Assess Impact of Earlier Cuts

Johannesburg, September 18, 2025 — The South African Reserve Bank (SARB) has decided to hold its key repo rate at 7.00%, signaling a cautious approach amid signs of moderating inflation and a recovering economy.

The decision, made by a split Monetary Policy Committee (MPC), comes after the central bank cut interest rates by 125 basis points since September 2024. Four MPC members voted to keep the rate unchanged, while two supported a 25-basis-point cut.

SARB Governor Lesetja Kganyago said the committee wanted to observe the full effects of previous rate reductions on the economy before making further adjustments. “The transmission of past monetary policy actions is ongoing, and we need to ensure that these measures effectively support growth while keeping inflation expectations anchored,” he said.

Recent data shows that consumer inflation unexpectedly cooled to 3.3% in August, down from 3.5% in July. The central bank has also shifted its inflation target stance toward the lower end of the 3–6% range, reflecting its focus on price stability while supporting economic recovery.

External risks remain a concern. Trade disruptions, global market volatility, and potential job losses from tariffs and other shocks could influence the bank’s next move. Analysts say the SARB’s cautious approach signals that further rate cuts, if any, will likely be gradual.

Economists are watching closely to see whether the lower interest rates will stimulate business investment and consumer spending without sparking inflation. The next MPC meeting is expected to provide additional clarity on the central bank’s trajectory amid a delicate balance between growth and price stability.