South Africa's central bank has signalled that borrowing costs could rise again this month, with Governor Lesetja Kganyago warning that inflation expectations have drifted above the target the Reserve Bank is determined to defend.
Speaking this week, Kganyago said the recent climb in expected inflation justified the Bank's decision in May to lift the repo rate by 25 basis points to 7% — its first increase in three years — and left little doubt that the Monetary Policy Committee is prepared to move again if the risks persist.
Why the Bank is on edge
The trigger has been a global energy shock. The MPC raised rates in May to stop an oil-price spike, driven by conflict in the Middle East, from feeding into lasting price pressures. Since then the Governor has repeatedly stressed that the Bank will act to keep inflation expectations anchored, arguing that allowing them to slide now would make price stability far more costly to restore later.
Kganyago has placed the 3% goal at the centre of the Bank's credibility. The SARB has been steering policy towards this firmer objective, a lower anchor than the older three-to-six percent target range, and the message from Pretoria is that the commitment is not up for negotiation.
What happens on 23 July
The MPC delivers its next decision on 23 July, and the market is split. Interest-rate futures suggest some traders are betting on another hike, while a number of economists reckon the committee will hold and adopt a wait-and-see stance to gauge whether the oil shock is genuinely fading. Lower fuel prices from 1 July should relieve some pressure, but a weaker rand or fresh energy volatility could still force the Bank's hand.
For households and businesses already carrying the steepest lending rates in years, the tone is sobering. The run of falling interest rates that many had pencilled in for 2026 now looks, at best, delayed — and at worst, about to reverse.
