SARB Keeps Repo Rate at 6.75% on March 26, 2026

The South African Reserve Bank (SARB) kept the repo rate unchanged at 6.75% on March 26, 2026. This decision impacts households, businesses, and the broader economy. It comes amid rising global uncertainty from the Middle East conflict, which could affect inflation and growth.

Confirmed Facts

Reserve Bank Governor Lesetja Kganyago announced the unanimous decision during a media briefing in Pretoria.

The repo rate stays at 6.75%.

South Africa’s economy grew by 1.1% in 2025, with output up in the fourth quarter.

Inflation stood at 3.0% in February 2026, matching the SARB target. Core inflation also hit 3.0%.

These details come from Kganyago’s statements, as reported by SAnews.gov.za.

Relevant Context

The Middle East conflict started a few weeks ago. It acts as a supply shock, raising prices while hurting demand.

Kganyago noted that leading central banks have held rates steady to gather more data.

He said: “The fact is, we are still only a few weeks into this crisis. The coming months will be crucial for assessing the longer-term inflation consequences.”

South Africa has seen gains like lower inflation targets, better fiscal outlooks, and steady growth.

Implications

The conflict raises upside risks to inflation.

Higher energy prices will push headline inflation to around 4% soon. Fuel inflation may top 18% in the second quarter.

Growth projections hold at about 2% over the next few years. Downside risks exist due to the war.

Kganyago explained: “The standard response to a supply shock is to look through first-round effects… central banks should be alert to second-round effects.”

Prudent policy helps maintain recent progress despite global issues.

Near-term Developments

SARB forecasts inflation unwinding to 3% by late 2027 in the baseline case.

Two worse scenarios were reviewed.

In the first, conflict lasts two more months, oil averages nearly $100 per barrel, and the rand weakens 5%. Inflation exceeds 4%, needing one rate hike this year.

In the second, war lasts over a year, oil stays above $100, and rand weakens 10%. Inflation tops 5%, requiring several hikes. Target return comes in 2028.

Growth weakens at first but catches up later in both cases.

Conclusion

The SARB’s choice to hold the repo rate at 6.75% balances current data with emerging risks. Ongoing monitoring of the Middle East conflict will shape future moves. Stay informed on economic updates from official sources.

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