Home / Business and Economy / SARB Holds Rates Steady Amidst Shifting Economic Winds
SARB Holds Rates Steady Amidst Shifting Economic Winds
31 Jan
Summary
- The main repo rate remains at 6.75%, pausing a cutting cycle started in late 2024.
- Headline inflation was 3.6% in December, averaging 3.2% for 2025, a 21-year low.
- The rand strengthened by 17% against the USD due to rising safe-haven asset prices.
The South African Reserve Bank (SARB) decided to maintain its main repo rate at 6.75% on Thursday. This move pauses the rate-cutting cycle that commenced in September 2024, after rates were reduced from a 15-year high of 8.25%.
SARB Governor Lesetja Kganyago noted that economic growth appears steadier, with domestic household consumption increasing by over 3% in 2025. This stability is occurring amidst global geopolitical uncertainty, persistent low oil prices, and a strengthening rand.
Inflation figures show headline inflation at 3.6% in December, slightly up from 3.5% in November. For the entirety of 2025, inflation averaged 3.2%, marking a 21-year low. The SARB's target remains 3%, with a tolerance band of plus or minus one percentage point.
The South African rand has experienced a notable appreciation, surging by 17% against the US dollar in the past year. This strengthening is attributed to rising gold and platinum prices, driven by demand for safe-haven assets amid heightened global geopolitical tensions.
Economic growth projections for South Africa remain largely consistent. The SARB estimates GDP grew by 1.3% in 2025, unchanged from its November forecast. The bank projects a slightly higher growth of 1.4% for the upcoming year.
