The repo rate remains unchanged at 7.0% after the SARB September 2025 meeting of the Monetary Policy Committee (MPC). The decision, supported by most analysts, reflects falling inflation, global monetary shifts, and the Reserve Bank’s commitment to stability.

Contents

Why the South African Reserve Bank Held Rates
Inflation Target: 3% South Africa
Global Context: Fed Cut vs Repo Rate South Africa 7.0%
Economist Expectations Repo Rate
Consumer and Investor Impact Repo Rate
South Africa Inflation Outlook

Why the South African Reserve Bank Held Rates

Since late 2024, the South African Reserve Bank repo rate has been cut by a total of 125 basis points. These reductions eased conditions for households and businesses. In September, however, the MPC voted 4–2 to hold rates steady.

Governor Lesetja Kganyago said inflation remains contained. Headline CPI slowed to 3.3% in August, while core inflation stayed at 3.1%. These numbers sit within the 3–6% target band, but risks still exist from fuel, food, exchange rate volatility, and global trade tensions.

Inflation Target: 3% South Africa

The repo rate pause also reflects SARB’s longer-term shift. Instead of aiming for the 4.5% midpoint of its target range, the Bank now wants inflation anchored nearer 3%.

Jacques Nel (Oxford Economics Africa) said SARB forecasts inflation could move to 3% by 2027, although expectations are adjusting slowly.
The latest survey shows medium-term inflation expectations at 4.2%, down from 4.5%. This is progress, but still above the new anchor.
In scenarios where expectations remain “backward-looking”, SARB might adopt a tighter stance, leading to fewer rate cuts than in the baseline forecast.

This change signals SARB’s intention to lock in long-term price stability, even if it requires short-term caution.

Global Context: Fed Cut vs Repo Rate South Africa 7.0%

The repo rate in South Africa of 7.0% contrasts with the US Federal Reserve’s 25-basis-point cut earlier this month.

Maarten Ackerman (Citadel) said the wider interest rate gap makes South Africa appealing to yield-seeking investors.
The country continues to offer attractive real yields, drawing capital flows that support the rand.
Strong global demand for gold and a softer US dollar further reinforce rand stability and the repo rate.

Economist Expectations Repo Rate

Local experts broadly welcomed the pause:

Frank Blackmore (KPMG) said SARB wants inflation closer to 3% than 4.5%. Expectations have eased but need to align further.
Harry Kellan (FNB CEO) described the move as a sign of a stabilising economy, giving businesses space to adapt to shifting trade patterns.
Mamello Matikinca-Ngwenya (FNB Chief Economist) emphasised that while rates matter, factors like job creation, rising incomes, and commodity strength also drive optimism.

Professor Raymond Parsons (NWU Business School) highlighted the split vote, noting that while some MPC members favoured another cut, the majority prioritised credibility around the 3% target. He added that this could mean sacrificing some short-term growth for long-term stability.

Consumer and Investor Impact Repo Rate

For households, the unchanged repo rate means interest rates in South Africa remain high. Loan repayments for homes, cars, and credit cards will not ease for now.

For investors, the outlook is stronger. With the repo rate in South Africa at 7.0%, South Africa provides appealing real returns. These inflows stabilise the rand and help contain imported inflation. The consumer and investor impact of the repo rate is clear: pressure on borrowers, but rewards for savers and investors.

South Africa Inflation Outlook

The South Africa inflation outlook will shape future SARB policy. The key question is how quickly expectations converge to 3%.

SARB will track:

Whether CPI holds near 3% or rises due to food and fuel prices.
Global interest rate moves, especially further US Fed cuts.
Commodity performance, particularly gold and platinum.
Domestic growth, now projected at 1.2% in 2025, though vulnerable to tariffs and fiscal risks.

Outlook for South Africa’s Economy

The repo rate remains unchanged at 7.0%, showing SARB’s cautious stance. By aiming for a 3% inflation anchor, the Bank is signalling a long-term shift toward lower and more stable inflation.

Households may continue to feel strain from high borrowing costs, but investors benefit from strong yields and a firmer rand. If inflation expectations move closer to SARB’s goal, South Africa could see lower rates in the future, alongside more sustainable growth and financial resilience.

Also Read: Repo Rate Cut: A Welcome Move Due to Stable Rand and Improved Economic Outlook