MPC increases interest rates citing upward inflation due to war in Middle East
The South African Reserve Bank’s Monetary Policy Committee (MPC) has decided to increase rates by a o.25 percent which takes the policy rate to 7% and the prime lending rate to 10.5 %.
The bank has cited upward inflation risks emanating from the ongoing war in the Middle East which has push up oil prices and resulted in significantly higher fuel prices in South Africa.
Inflation rose rapidly from 3,1% in March to 4% in April. The bank expects inflation to average 4.4% this year amid rising prices.
“New results from our main survey of inflation expectations will only be available next month. However, market indicators and analyst expectations are edging higher. Given the forecasts, we see upside risks to inflation. Against this backdrop, the committee decided to increase the policy rate by 25 basis points, to 7%, effective from 29 May. Four members preferred this action, while two favoured no change. The committee agreed that inflation risks had intensified, and that the challenge of large and overlapping shocks would likely trigger second round effects, requiring a monetary policy response,” says SARB Governor Lesetja Kganyago.
The MPC decided to increase the policy rate by 25 basis points, to 7%, effective from 29 May. Four members preferred this action, while two favoured no change. #SARBMPCMay26 pic.twitter.com/u5TKatdFnF
— SA Reserve Bank (@SAReserveBank) May 28, 2026