The Reserve Bank has held the repo rate at 6.75%, citing increased domestic risks and “what appears to be a rupture in the global political order”. “There are also new threats to central bank independence,” Bank governor Lesetja Kganyago said, adding that 2026 “has begun with a new round of shocks”. He also flagged electricity costs and food inflation — particularly meat prices, which are being affected by the foot-and-mouth disease outbreak — as risks to monitor.
Kganyago announced the decision on Thursday after the monetary policy committee’s (MPC) first meeting of 2026. Two members favoured a cut while four preferred a hold. South African bonds firmed after the announcement with the yield on the blended 10-year dropping to its best level since July 2019 — pre-Covid-19.
At 3.38pm the rand had strengthened 0.3% to R15.72/$, little changed from before the speech. The Bank’s decision marks the second MPC meeting since the 3% inflation target was formally adopted. It also comes ahead of the national budget in February, where markets will be watching to see if the government’s spending plans are consistent with that lower inflation goal.
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While consumer inflation edged up slightly in December, closing the year at 3.6% (up from 3.5% in November), it brought the annual average for 2025 to 3.2% —the lowest since 2004and well within the Bank’s official 3% target, with a tolerance band of one percentage point on either side. The Bank now expects inflation to have peaked in December and to slow from here. It has also lowered its 2026 inflation forecast from 3.5% to 3.3%, citing a stronger rand and lower oil price assumption.
“We are, however, keeping an eye on food inflation, especially meat prices,” Kganyago said. “We are also concerned about electricity prices, given that Nersa’s price correction may rise from R54bn to R76bn.” The MPC considered two scenarios: one favourable, one adverse. Over the past year, the rand and oil prices have shifted significantly. While the Bank’s baseline forecast assumes these variables will remain close to their end-2025 levels, the outlook remains uncertain.
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