By Lehlohonolo Lehana.
The South African Reserve Bank (SARB) has kept interest rates unchanged, with the repo rate remaining at 6.75%, and the prime lending rate will stay at 10.50%.
On Thursday, 29 January, the Monetary Policy Committee (MPC) voted to keep interest rates unchanged following a 25-basis-point cut in November 2025.
The decision was not unanimous. Two members of the MPC favoured a 25-basis-point cut.
Governor Lesetja Kganyago said the MPC decision on Thursday was split, with two members in favour for a 25-basis-point cut, while four voted for holding rates steady.
Most economists and market watchers had expected a tight vote, with the view that any further Sarb cut would likely only come in March, favouring a cautious wait-and-see approach. There is still consensus that there could be two cuts totalling 50 basis points this year.
“Last year was marked by extreme global uncertainty, and 2026 has begun with a new round of shocks,” said Kganyago.
“Geopolitical tensions remain elevated, reflecting what appears to be a rupture in the global political order. There are also new threats to central bank independence,” he warned.
“Markets are jittery, and precious metals like gold have received safe-haven flows. There are also ongoing risks of an Artificial Intelligence (AI) bubble. Furthermore, global imbalances have become very large. For instance, China’s trade surplus was over a trillion dollars last year, a new record.
“Meanwhile, government debt is still growing fast in key economies, with the US fiscal deficit, for example, approaching $2 trillion dollars. These trends are not sustainable, “Kganyago added.
“The economy has expanded for four consecutive quarters, and the available data suggest it grew further in the most recent quarter,” he said.
“This would mark SA’s longest unbroken growth phase since 2018,” said Kganyago.
“The main growth driver has been household consumption, up by more than 3% last year, compared to an estimated 1.3% for the overall economy. Unfortunately, investment has been weak, contracting during the first half of 2025. However, the third-quarter data showed a rebound.
“We hope this investment recovery will be sustained, allowing the economy to achieve structurally higher growth,” he said.
Dr Andrew Golding, chief executive of the Pam Golding Property group, said the MPC adopted a cautious stance by keeping the repo rate unchanged at 6.75%.
He said the decision was not what existing mortgage holders and prospective homebuyers seeking credit were hoping for.
However, most market commentators believe that, with inflation remaining contained, there is scope for up to two 25bps repo rate cuts during 2026.