Cape Town – The South African Reserve Bank (SARB) has kept the repo rate unchanged at 7%, leaving the prime lending rate at 10.50%, citing an uncertain economic outlook despite stronger-than-expected growth earlier this year.
Announcing the decision on Thursday, Reserve Bank Governor Lesetja Kganyago said four members of the Monetary Policy Committee (MPC) supported holding rates, while two favoured a 25-basis-point increase.
“The committee agreed that the outlook is uncertain… the policy stance is appropriate for now, with rates somewhat restrictive,” Kganyago said.
The central bank expects economic growth to remain weak in the second and third quarters, with Kganyago warning that consumer and business confidence have deteriorated, while higher fuel prices and municipal dysfunction continue to weigh on the economy.
LIVE | SARB Governor Lesetja Kganyago says the dysfunction of municipalities has become a constraint to growth. pic.twitter.com/aQBgRrn13j
— SABC News (@SABCNews) July 23, 2026
“We started this year with good momentum, but households have suffered from higher fuel prices… It is also increasingly clear that municipal dysfunction has become a binding constraint on growth.”
On inflation, Kganyago said June’s rise to 5%, the highest since June 2024, was largely driven by higher fuel costs linked to the Middle East conflict. While food inflation has eased and the rand has remained resilient, SARB expects inflation to remain above 4% until early next year.
Reaffirming the bank’s long-term goal, Kganyago said:
“We are setting policy to achieve 3% inflation over time,” adding that the MPC “will act as needed” to keep inflation on track while supporting sustainable economic growth.
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Compiled by Betha Madhomu
