SARB Holds Repo Rate Unanimously at 6.75% as Iran War Drives Oil Above $100, Raises 2026 Inflation Forecast to 3.7%
PRETORIA, 26 March 2026. The South African Reserve Bank's Monetary Policy Committee voted unanimously to hold the repo rate at 6.75% on Thursday, citing surging global oil prices driven by the Iran war as the dominant upside risk to the inflation outlook, while raising its 2026 inflation...
SARB Holds Repo Rate Unanimously at 6.75% as Iran War Drives Oil Above $100, Raises 2026 Inflation Forecast to 3.7%
PRETORIA, 26 March 2026. The South African Reserve Bank's Monetary Policy Committee voted unanimously to hold the repo rate at 6.75% on Thursday, citing surging global oil prices driven by the Iran war as the dominant upside risk to the inflation outlook, while raising its 2026 inflation forecast sharply to 3.7% from the 3.3% projected at the January meeting.
Governor Lesetja Kganyago announced the decision, explaining that Brent crude prices had risen above $100 per barrel in response to the Middle East conflict and that fuel inflation was expected to reach more than 18% in the second quarter of 2026 as the price increases passed through to South African pump prices. Headline inflation, which had reached the SARB's new 3% target midpoint in February, was now projected to accelerate to approximately 4% in the near term before gradually moderating. The 2027 inflation forecast was also revised slightly upward to 3.3% from 3.2%.
The unanimous decision was a significant shift from the January MPC meeting, where the committee had split four to two in favour of a hold. The unanimous hold in March reflected the sharp change in the external environment: the oil-price shock had materially altered the inflation trajectory and removed the rationale for the two January dissenters, who had advocated a cut based on the then-benign February inflation data.
The SARB's quarterly projection model, which had pointed to gradual cuts at both the November 2025 and January 2026 meetings, now showed rates remaining unchanged for a substantially longer period, with cuts no longer signalled in the near term. Nedbank and other market participants revised their rate-cut expectations, with some forecasters suggesting rates could remain on hold for the rest of 2026 if oil prices stayed elevated.
Economists noted that the oil shock tested the credibility of South Africa's new 3% inflation target, which had been adopted in November 2025. An external commodity price spike of this magnitude risked pushing inflation temporarily above the 4% upper boundary of the acceptable deviation band, a scenario the SARB was seeking to prevent from becoming entrenched in expectations.
The SARB's next MPC meeting is scheduled to conclude on 21 May 2026.