The South African Reserve Bank maintains its repo rate at 6.75%, aiming for a stable inflation target amid global uncertainties and economic growth challenges. The Monetary Policy Committee (MPC) of the South African Reserve Bank (Sarb) kept the repo rate unchanged at 6.75% on Thursday, 29 January, despite a significant rand rally and gold surging past $5,100 an ounce. The decision keeps the prime lending rate at 10.25%.
While headline inflation rose to 3.6% in December, Sarb Governor Lesetja Kganyago noted that the 2025 average of 3.2% was close to their 3% objective. “Last year was marked by extreme global uncertainty, and 2026 has begun with a new round of shocks,” said Kganyago. “Two members favoured a cut of 25 basis points, while four preferred a hold.
When you have a split decision, you should also celebrate because that means that there is no groupthink in the MPC.” This move reflects a central bank determined to anchor expectations at its new 3% target, even as the economy enters its longest unbroken growth phase since 2018. The rand’s recent performance, hitting below the R16/$ mark, was a central theme of the briefing. Kganyago attributed this not just to dollar weakness, but to “pull factors” like South Africa’s mineral wealth.
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“With people looking to diversify out of the weakening dollar, they had been buying gold. Gold didn’t just rise on its own. It pulled other metal prices, silver, platinum and so forth,” the governor said, adding that the adoption of the new inflation target had itself bolstered the currency.
FNB chief economist Mamello Matikinca-Ngwenya noted that South Africa’s removal from the Financial Action Task Force’s grey list and the European Union’s high-risk list provided an “important confidence boost” just as commodity demand improved. She pointed out that rising gold, silver, and nickel prices were “strengthening the country’s financial position and export earnings”, which should help unlock increased employment in the mining sector. Kganyago remained wary of global fragilities, including the “ongoing risks of an Artificial Intelligence (AI) bubble” and unsustainable US fiscal deficits.
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