South Africa’s central bank has chosen caution, keeping interest rates unchanged while closely monitoring inflation expectations and rising electricity costs.
South Africa’s central bank has decided to keep its main lending rate, known as the repo rate, unchanged at 6.75%. The decision reflects a cautious approach as policymakers wait for inflation expectations to fall further. Most economists surveyed had predicted this outcome.
Central bank Governor Lesetja Kganyago explained that the Monetary Policy Committee was divided: four members supported holding the rate steady, while two wanted a small cut. The bank wants clearer evidence that inflation is firmly under control before easing policy.
Inflation rose slightly to 3.6% in December, up from November. Although this is above the bank’s 3% target, it remains within the acceptable range. Officials believe this may be the peak, with inflation expected to slow in coming months.
However, concerns remain. Rising electricity tariffs, driven by regulatory recalculations, could push prices higher. Global trade tensions and unstable financial markets also add uncertainty, reinforcing the bank’s wait-and-see stance.
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