South African Reserve Bank raises interest rates to 7.25%

The South African Reserve Bank (SARB) has raised its key policy repo rate by 25 basis points to 7.25 percent. The decision, made unanimously by the Monetary Policy Committee, marks the first rate increase since May.

Governor Lesetja Kganyago cited escalating global shocks and rising fuel prices as primary drivers for the hike. Geopolitical tensions in the Middle East have contributed to volatile energy markets, threatening to push domestic inflation further above the bank’s 3 percent target. Headline consumer inflation in South Africa rose to 4.4 percent in August, up from 4.3 percent in July.

The central bank has adjusted its inflation forecasts, expecting headline inflation to remain above 5 percent later this year and into early 2027 before receding. Economic growth projections have also been revised downward, with the 2026 growth forecast cut to 1.2 percent due to the combination of high inflation and a weakening economic outlook.