Reserve Bank raises interest rates

Añadido: 2026-05-31

[00:00:00]Credit carrying consumers will soon pay more in their monthly installments. The South African Reserve Bank has increased the repo rate by 25 basis points to 7% after four of the six monetary policy committee members backed the hike.

[00:00:17]>> Inflation risks had intensified and that is the challenge of large and overlapping lapping shocks which likely trigger second round effects requiring a monetary policy response.

[00:00:30]Our decision was aimed at managing risks and ensuring that inflation returns to target.

[00:00:36]>> The Reserve Bank says that global risks have intensified sharply since its last meeting in March. At the center of concern are the conflicts in the Middle East and continued disruptions around the Strait of Hormuz, a key global oil route. The SARB warns that higher fuel prices could trigger broader inflation pressures across the economy.

[00:01:00]Governor Lesetja Kganyago says fuel costs are felt immediately, the indirect effects take longer to filter through food production and transport costs. The bank modeled several risk scenarios ahead of the decision including a prolonged Middle East conflict, weather-related food shocks linked to El Nino and the risk that bigger global disruptions could have a much larger impact on inflation. South Africa's inflation rate rose to 4% in April from 3.1% previously moving to the top end of SARB's preferred target range.

[00:01:39]>> Still quite a lot of extra fuel pressure in our forecast. So you had that close to 12% inflation in April. You know, we're looking at numbers in the 20s pretty close to 30% for fuel inflation for some of the coming quarters.

[00:01:51]>> The Reserve Bank says while the local economy shows signs of recovery, global uncertainty and weaker household spending continue to pose risks to growth. It has lowered South Africa's growth outlook for the next 2 years.

[00:02:05]Despite concerns over the economy, the SARB says expectations for interest rate cuts this year have largely faded globally. Many central banks are expected to keep rates higher for longer. Governor Kganyago confirmed that a larger 50 basis points increase was also discussed.

[00:02:24]>> Was 50 basis points considered? Yes.

[00:02:28]There was a protracted discussion on that.

[00:02:32]And the in the final analysis, the view of the committee was that we are still looking for more information and if we are to act cautiously, we would do a 25 basis point adjustment to the policy rate.

[00:02:55]>> The Reserve Bank says if inflation pressures ease later in the forecast period, interest rates could gradually move lower again, but it's not rethinking its inflation targets.

[00:03:07]>> As the MPC, we come every 2 months to explain to you the decisions that we've taken.

[00:03:13]And we have highlighted that we may be outside the target for certain periods of time when we experience a shock.

[00:03:21]Uh and the job of the MPC is to help with the course correction.

[00:03:26]>> For now, however, consumers face another increase in borrowing costs as the SARB prioritizes inflation stability amid growing global uncertainty. For Newsroom Africa on Channel 405, I'm Thabiso Khumalo in Pretoria.

[00:03:41]>> July.