Point of view: 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.

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 highlighted 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.”

For consumers, the decision brings stability rather than immediate financial relief. Hayley Parry, money coach and facilitator at 1Life’s Truth About Money, says households have been hoping for a cut, especially with economists predicting reductions of up to 0.5 percentage points later this year.

“The MPC’s decision to leave interest rates unchanged today brings certainty, but not relief, for South African households. Predictability matters. When families know their bond and loan repayments won’t change, they can plan more effectively and avoid unexpected shocks," Parry says.

Parry says that the timing is significant, with the government’s annual budget announcement due in February.

“This is the perfect moment for households to review their own budgets. Stability allows families to identify areas where spending can be controlled and prepare for the future. If cuts do come later this year, this period of certainty can be used strategically, either to pay down debt more aggressively or to boost savings.”

Tando Ngibe, senior manager at Budget Insurance, emphasises the practical impact of the decision on everyday households. “With the repo rate steady at 6.75% and the prime interest rate at 10.25%, monthly debt repayments will not increase,” Ngibe said. “If you have a home loan, financed car, personal loan, or credit card tied to the prime rate, your instalments remain the same.”

Ngibe points to contained inflation and a stronger rand as positive developments. “Inflation at 3.6% is still within the Bank’s target, and the stronger rand has helped ease cost pressures. For consumers, this is a good time to review your budget, pay down high-interest debt, and build an emergency fund. Avoid taking on new credit unless necessary, because future cuts are not guaranteed.”

While the Reserve Bank’s decision may disappoint those hoping for immediate relief, economists and consumer experts agree that the stability it provides is valuable. With inflation expected to trend lower and growth showing signs of improvement, households and businesses alike have an opportunity to position themselves for potential rate cuts later in the year.

For now, the message is clear: steady repayments, contained inflation, and cautious optimism define the economic landscape heading into 2026.

*  Maleke is the editor of Personal Finance.

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