JOHANNESBURG, Sept 23 – The South African Reserve Bank (SARB) raised its benchmark interest rate by 25 basis points to 7.25% on Wednesday, tightening monetary policy as renewed inflation pressures complicate the country’s price outlook.
The six-member Monetary Policy Committee approved the increase unanimously, with Governor Lesetja Kganyago announcing the decision in Pretoria. The move marks the second rate increase by the central bank this year.
The decision came after South Africa’s annual headline inflation rose to 4.4% in August, from 4.3% in July, although the reading remained below the 4.5% economists had expected.
The Reserve Bank has adopted a 3% inflation target, with the institution indicating that renewed global price pressures, particularly from higher energy costs and geopolitical tensions, remain important risks to the inflation outlook.
The latest move follows the central bank’s decision to leave rates unchanged at its July meeting. The September meeting was scheduled for September 23, with the SARB confirming the date for its latest Monetary Policy Committee announcement.
The renewed tightening comes against a backdrop of elevated global energy and geopolitical risks. The SARB has previously highlighted the impact of the Middle East conflict and higher oil prices on transport and food costs, noting that these pressures can feed into broader inflation.
The rate increase raises borrowing costs for households and businesses while reinforcing the central bank’s focus on keeping inflation expectations anchored as it seeks to return price growth sustainably toward its 3% objective.
