Conservative approach expected from SARB on repo rate

Pennywise consumers will have their eyes fixed on the South African Reserve Bank (SARB) in the coming days.

The SARB’s Monetary Policy Committee (MPC) will meet this week and announce rates on Thursday.

Experts believe the central bank will leave the repo rate untouched, fostering hopes for a more positive outcome for consumers later in the year.

Six consecutive holds

The United States’ Federal Open Market Committee (FOMC) is a leading indicator of local financial sentiment, with the minutes of the last FOMC meeting providing promising insights.  

“The rising probability for an earlier start to the US interest rate cut cycle has underpinned the rand, aiding its strength from nearer R19.00/USD in the first half of June,” said Investec’s Chief Economist Annabel Bishop.

ALRO READ: Are South African interest rates unnecessarily high?

While the minutes implied a weakened Dollar, Bishop added that the political developments of the Government of National Unity had played a significant role.

For now, the economist expect the SARB to maintain the status quo and hold the repo rate at 8.25% for the seventh consecutive MPC meeting.

Inflation within policy targets

Following the last MPC announcement, Governor of the SARB Lesetja Kganyago outlined several positives.

He stated that the Consumer Price Index (CPI) figures were positive, allowing the SARB to revise down forecasts marginally.

ALSO READ: ‘It makes sense to protect depositors’: Reserve Bank launches deposit insurance

This has had a positive effect on inflation forecasts, helping the SARB to achieve their midpoint objective of 4.5%, as opposed to the current 5.2%, several quarters earlier in 2025.

“Consumer inflation continued to slow for the second consecutive month, performing better than expected. This improvement was mostly due to easing food and core inflation,” he stated.

Residential property price inflation up

Figures from the recently released National Residential Property Price Index (RPPI) show a slight increase in property values.

The national average of property price inflation showed a 2.6% increase in February from the same period the previous year.

The Western Cape was the greatest driver of this figure, registering a 6.1% increase between February 2023 and 2024.

Gauteng failed to come close to their cape rival, registering only a 0.2% increase.