The South African Reserve Bank has kept the repo rate unchanged at 6.75%, with the prime lending rate staying at 10.25%. Governor Lesetja Kganyago said the Monetary Policy Committee took the decision unanimously as global volatility and rising energy costs cloud the outlook.

The decision means borrowers will get no immediate relief on repayments. But it also signals that the Bank is not ready to cut rates while risks to inflation remain elevated. The latest policy guidance shows rate cuts have been pushed further out than previously expected.

Inflation is Still on Target for Now

For now, inflation remains under control. The Reserve Bank said headline inflation was 3.0% in February 2026, exactly in line with its target. Core inflation was also 3.0%, giving policymakers some breathing room at this meeting.

The Bank warned that higher prices for oil, gas and fertiliser are likely to push headline inflation towards 4% in the near term. It expects fuel inflation to run above 18% in the second quarter before easing later, with inflation only returning to 3% late next year under its baseline forecast.

Global Conflict is Driving the Warning

The big risk comes from the conflict in the Middle East. The Reserve Bank described it as a supply shock that lifts prices while also weakening demand. Kganyago said central banks cannot stop the first-round effects of such a shock, but they must watch closely for second-round effects that spread price increases more broadly across the economy.

The Bank said the coming months will be critical in judging the longer-term inflation impact. It added that markets have already scaled back expectations for rate cuts as uncertainty deepens.

More Hikes are Still Possible

The clearest warning from the MPC is that higher rates are still on the table. In two downside scenarios tested by the Bank, inflation rises above 4% in one case and above 5% in the other. Both scenarios would require interest rate hikes this year, with the more severe case pointing to several increases.