SARB keeps interest rates unchanged ahead of budget announcement

THE South African Reserve Bank’s Monetary Policy Committee (MPC) has opted to keep interest rates unchanged at its January meeting, despite encouraging signals in the economy.

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Growth is expected to accelerate modestly this year, with forecasts pointing to levels well above 1%, a significant improvement compared to the sluggish average of 0.7% recorded over the past decade. Inflation, meanwhile, averaged 3.2% last year, close to the Bank’s new 3% target. December's figure of 3.6% was slightly higher, but economists believe it reflects temporary pressures and marks the peak before inflation begins to ease further in 2026.

Frank Blackmore, lead economist at KPMG South Africa, explained the Bank’s cautious stance: “While the outlook for growth and inflation is encouraging, the Reserve Bank high-

lighted that risks remain.

“These include external pressures such as geopolitical and trade-related uncertainties, and internal risks like potential increases in administered prices, particularly electricity tariffs. The risks are broadly balanced, but they still pose upside risks to inflation.”