SARB Holds Repo Rate at 6.75% in Split Decision, Lowers 2026 Inflation Forecast
PRETORIA, 29 January 2026. The South African Reserve Bank's Monetary Policy Committee voted to hold the benchmark repo rate unchanged at 6.75% on Thursday, pausing after November's 25 basis-point cut in a four-to-two split decision that reflected diverging views among committee members on the...
SARB Holds Repo Rate at 6.75% in Split Decision, Lowers 2026 Inflation Forecast
PRETORIA, 29 January 2026. The South African Reserve Bank's Monetary Policy Committee voted to hold the benchmark repo rate unchanged at 6.75% on Thursday, pausing after November's 25 basis-point cut in a four-to-two split decision that reflected diverging views among committee members on the pace of monetary easing.
Governor Lesetja Kganyago announced the decision following the MPC's three-day meeting, noting that although the inflation outlook continued to improve, the committee wanted further evidence of a sustained decline in inflation expectations before resuming cuts. The two dissenting members voted for an additional 25 basis-point reduction.
The SARB revised its inflation forecast for 2026 downward to 3.3% from a previous estimate of 3.5%, while marginally raising its 2027 forecast to 3.2% from 3.1%. Kganyago said that on current projections, headline inflation is expected to reach the Reserve Bank's new 3% point target by 2028. The bank left its economic growth forecast unchanged at 1.4% for 2026 and 1.9% for 2027.
Policymakers cited two main sources of caution: the trajectory of electricity tariffs, which remain a domestic upside price risk, and heightened uncertainty in global trade policy, including the tariff announcements made by United States President Donald Trump. South Africa's rand has faced volatility against major currencies, and the MPC flagged that external shocks could pass through to domestic inflation.
The SARB's quarterly projection model indicated a continued path of gradual easing, with the benchmark rate seen declining to 6.31% by end-2026 and to 6.05% by end-2027, suggesting the committee's baseline anticipates further cuts later in the year if conditions allow.
The prime lending rate, at which commercial banks price most retail loans including home mortgages, remained at 10.25% following Thursday's decision. Most market participants had anticipated the hold, with the split reflecting genuine uncertainty about whether January's low inflation print, noting December 2025 inflation came in at 3.6%, justified immediate further easing.
The SARB's Monetary Policy Committee meets six times per year. The next scheduled meeting concludes on 26 March 2026.