The South African Reserve Bank has kept interest rates unchanged at its latest Monetary Policy Committee meeting, choosing caution despite signs of improving economic growth and easing inflation. While forecasts point to stronger expansion in 2026 and inflation remains close to the Bank’s target, policymakers remain wary of global uncertainty and domestic pressures such as rising administered prices. Economists and consumer experts say the decision brings stability rather than relief, giving households and businesses greater certainty over borrowing costs while they wait to see whether interest rate cuts materialise later in the year.
Frank Blackmore, Lead Economist at KPMG South Africa
The Monetary Policy Committee of the South African Reserve Bank left interest rates unchanged at its January meeting, despite a number of promising signs in the economy. Growth is forecast to be slightly faster this year than last year, and well above the 1% level, which is a vast improvement on the average of 0.7% experienced over the previous decade.
On the inflation front, inflation for last year averaged 3.2%, very close to the new target of 3%. The December figure came in at 3.6%, which, although higher, was due to temporary factors and is expected to be the peak in the Bank’s forecast as we enter 2026. As a result, we can expect further reductions in the inflation rate.
The reasons cited for keeping interest rates on hold were the number of risks that remain. Although these risks are viewed by the Reserve Bank as broadly balanced, they still pose upside risks to inflation. Most notably, these include external risks such as geopolitical and trade-related pressures facing South Africa, as well as internal risks, including potential increases in administered prices, particularly electricity tariffs.
Consumer:
Hayley Parry, Money Coach and Facilitator at 1Life’s Truth About Money
The Monetary Policy Committee’s decision to leave interest rates unchanged today brings certainty, but not relief, for South African households. Many consumers may have been expecting an interest rate cut, particularly given that economists are forecasting reductions of up to 0.5 percentage points by the end of the year. While today’s decision does not ease financial pressure, it does provide much-needed certainty.
This certainly matters because when households know their repayments, especially monthly bond and loan repayments, will remain unchanged, they are better able to plan and manage their finances, even in a strained environment. Predictability allows consumers to budget more effectively and avoid unexpected shocks.
Importantly, this decision comes just as the South African government prepares to announce its annual budget in February, making it an opportune time for households to review their own budgets for the year ahead, if they have not already done so. Knowing that interest rates have not changed gives consumers the chance to stabilise their finances, identify areas where spending can be controlled, and prepare for the future.
Should interest rate cuts materialise later in the year, this period of stability can be used strategically; either to pay down debt more aggressively or to set aside additional funds for savings or investment. In that sense, while today’s announcement may be disappointing for those hoping for immediate relief, it provides a valuable window for financial planning and positioning ahead of potential rate cuts.
Tando Ngibe, Senior Manager at Budget Insurance
Today the South African Reserve Bank kept the repo rate unchanged at 6.75% – which means the prime interest rate also stays at 10.25%. For ordinary households, this decision mean that your monthly debt repayments will not increase.
if you have a home loan, financed car, personal loan or credit card tied to the prime interest rate, your instalments remain exactly the same. The Reserve Bank says that global uncertainty, including cautious moves by the US Federal Reserve and risks like the rising cost of electricity means they must move carefully before cutting further.
The good news is that inflation remains contained and the stronger rand has helped ease some of the cost pressures. With inflation at 3.6% – still within the Bank’s target, prices increase should remain moderate in the short term.
For consumers, this is a good time to review your budget. Keep paying down that high interest debt, use the stability to build an emergency fund and avoid taking out new credit unless necessary as future cuts are not guaranteed. For now, consumers can breathe little easier, knowing that their repayments will remain steady and the economic outlook remains cautiously positive.