SARB Raises Repo Rate to 7% as Inflation Risks Cloud South Africas Economic Outlook

The South African Reserve Bank's Monetary Policy Committee has raised the repo rate by 25 basis points to 7%, effective 29 May 2026, in a move aimed at protecting the economy from rising inflation risks and overlapping global shocks. SARB Governor Lesetja Kganyago said four members of the committee supported the increase, while two preferred to keep rates unchanged, showing that the decision came amid a careful balancing act between controlling inflation and supporting growth. The Reserve Bank said the risks facing South Africa had intensified, with the committee considering three major scenarios: a prolonged Middle East conflict that could push up oil and food prices while weakening the rand, the possible return of El Niño conditions that could trigger drought and lift food inflation, and larger-than-expected cost pass-through effects from major shocks. Kganyago warned that these pressures could drive inflation higher and weaken economic growth, with the most severe scenario pushing inflation above 6% and requiring further rate hikes. The decision signals a cautious but firm stance from the Reserve Bank, as it works to anchor inflation expectations, protect household purchasing power and prevent temporary global disruptions from becoming a longer-term cost-of-living crisis for South Africans.