At its first policy meeting of 2026, the Monetary Policy Committee (MPC) of the South African Reserve Bank held the repurchase (repo) rate steady at 6.75%, maintaining a cautiously neutral stance in the face of global and domestic economic uncertainties. This decision, effective from the January 29 meeting, reflects a backdrop of easing inflation and stabilising growth, but also persistent risks in the external environment.

The Governor noted that headline inflation stood at 3.6% in December 2025, slightly above the central bank’s 3% target, though the committee believes this represented a cyclical peak and expects inflation to slow further as the year progresses. Broadly, inflation last year averaged 3.2%, close to the Bank’s objective. Core price pressures remain modest, supported by a stronger rand and lower global oil prices, although inflation in services remains elevated.

Economic growth in South Africa has shown encouraging momentum, with four consecutive quarters of expansion, a run not seen since 2018. Household consumption has been the primary growth driver, while business investment has been more erratic. The MPC’s forecasts suggest growth could approach around 2% over the medium term, contingent on sustained investment recovery.

On global developments, elevated geopolitical tensions, large external imbalances and uncertainties in financial markets continue to challenge central banks worldwide. This underscores why the MPC chose caution in its rate stance. A majority of members voted to hold rates, with some favouring a future cut should inflation expectations continue to soften.

Looking forward, the SARB anticipates gradual easing of inflation and stands ready to adjust policy on a meeting-by-meeting basis, with its next policy decision due on 26 March 2026.