JOHANNESBURG, Jan 29 – South Africa’s central bank kept its main lending rate unchanged at 6.75% on Thursday, opting for caution as it waits for inflation expectations to ease further and monitors potential price pressures from electricity tariffs and global trade tensions.
The decision was split. Four members of the Monetary Policy Committee voted to hold the repo rate steady, while two supported a 25 basis point cut, Governor Lesetja Kganyago said at a press conference. Most economists polled by Reuters had expected no change.
“We look forward to inflation expectations declining further as South Africans experience ongoing lower inflation,” Kganyago said.
Headline inflation edged up to 3.6% in December from November, remaining above the central bank’s 3% target but still within its one percentage point tolerance band. Kganyago said policymakers believe December marked the peak, with inflation expected to slow in the coming months.
However, the committee flagged electricity prices as a key risk. South Africa’s energy regulator has acknowledged errors in earlier tariff calculations, which could lead to steeper power price increases than previously announced. Officials also highlighted uncertainty stemming from global trade tensions and volatile financial markets.
The central bank slightly adjusted its inflation outlook, forecasting headline inflation to average 3.3% in 2026 and 3.2% in 2027, compared with previous projections of 3.5% and 3.1%. Economic growth forecasts were left unchanged, with growth seen at 1.4% in 2026 and 1.9% in 2027.
The decision underscores the bank’s cautious stance as it balances easing price pressures against structural risks in the domestic economy and an unsettled global environment.
