Cape Town – The South African Reserve Bank (SARB) has kept its policy rate unchanged at 6.75%, citing caution, as rising energy prices linked to the US-Israel conflict with Iran are expected to push up inflation.
Governor Lesetja Kganyago said on Thursday the bank’s “prudent approach is proving appropriate” amid heightened global uncertainty. Headline inflation is projected to rise to around 4%, with fuel inflation exceeding 18% in Q2.
Before the conflict, inflation was well-contained, reaching the central bank’s 3% target in February, and economists had anticipated further rate cuts this year.
WATCH | Reserve Bank Governor Lesetja Kganyago says: “Higher energy prices will raise inflation in the near term.” pic.twitter.com/jGALc50QMk
— SABC News (@SABCNews) March 26, 2026
However, the war has forced SARB to postpone easing, keeping rates stable for longer. Economic growth forecasts remain at 1.4% for 2026 and 1.9% for 2027.
The bank also modeled two adverse scenarios for the conflict, with inflation exceeding 5% in the worst case and only returning to target by 2028. The rand has weakened more than 6% against the dollar since the war began, exposing South Africa to higher fuel import costs.
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Compiled by Betha Madhomu
