SARB keeps interest rates on hold, but the outlook is improving for South Africa

Stephen Grootes speaks to Patrick Buthelezi. Economist at Sanlam Investments about the South African Reserve Bank’s decision to keep interest rates unchanged at 6.75%.

Listen to the interview in the audio player below.

The South African Reserve Bank’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.75%.

Four members favoured a hold while two supported a 25-basis-point cut.

The SARB described 2025 as a turning point for the South African economy, citing progress on domestic reforms, including the adoption of a new inflation target.

These developments have contributed to lower borrowing costs, declining inflation expectations and more stable growth.

During a media briefing on Thursday, Reserve Bank governor Lesetja Kganyago said a stronger rand and lower global oil prices have helped reduce near-term inflation risks.

Looking ahead, the central bank expects economic growth to gradually improve towards 2% over the medium term, provided fiscal discipline is maintained and structural reforms continue.

Analysts have widely forecast the likelihood of rate cuts later this year, but the SARB has stressed that future decisions will remain data-dependent and taken on a meeting-by-meeting basis.

Speaking to Stephen Grootes on The Money Show, Patrick Buthelezi, economist at Sanlam Investments says the Reserve Bank governor had a optimistic outlook on inflation for 2026.

"The reason why they reduced inflation forecast is because of the currency that has been extremely strong...but the thing here is, they are targeting inflation at about 3%, and they want to anchor inflation expectations at 3%."

- Patrick Buthelezi, economist - Sanlam Investments

"South Africa has been implementing reforms...we are beginning to see the benefits of these reforms, whether from the energy side, last year loadshedding was very minimal. On the logistics side, rail also showing some improvement, so we're moving in the right direction."

- Patrick Buthelezi, economist - Sanlam Investments

"A combination of all these reforms are very positive for South Africa, that is also why we saw for instance the ratings agency also shifting the outlook. In South Africa the sentiment is clearly shifting."

- Patrick Buthelezi, economist - Sanlam Investments

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