South Africa keeps interest rate at 7% amid rising inflation, rand weakness

South Africa’s central bank has kept its key interest rate unchanged at 7% as policymakers assess persistent inflation risks and uncertainty surrounding oil prices and the Middle East conflict.

The South African Reserve Bank’s Monetary Policy Committee (MPC) announced the decision on Thursday, despite most economists expecting another 25-basis-point rate hike.

The decision follows a rate increase at the MPC’s previous meeting in May and sent the rand weaker as markets adjusted to the decision to keep monetary policy unchanged.

What they are saying

The MPC said its current policy stance remained appropriate for now, although members were divided over whether to raise rates further.

• “Four members preferred a hold, while two favoured an increase of 25 basis points,” the MPC said.
• “The committee agreed that the outlook is uncertain, and with the rate increase at our previous meeting, the policy stance is appropriate for now, with rates somewhat restrictive,” it added.
• “The adverse scenario has inflation persistently above target, with the shock feeding through to food prices as well as core. This requires an extra hike this year and an extended period of restrictive policy,” the central bank said.
• “By contrast, the favourable scenario shows inflation returning to target more rapidly, implying that rates start easing in the current year,” it added.

The MPC said the outlook remains highly dependent on the evolution of inflation expectations and oil prices.

More Insights

The central bank assessed different scenarios for inflation and monetary policy as it considered the potential impact of rising inflation expectations and volatility in global oil prices.

The MPC said a continued rise in inflation expectations could increase pressure on wages and feed through to core inflation.

Under this scenario, the central bank’s model indicated tighter monetary policy, with one additional rate hike compared with the baseline forecast.

• An adverse oil price scenario assumed prices would rise to $100 per barrel in 2026 before gradually easing to $80 by 2029, the bank noted.
• A favourable scenario assumed oil prices of $78 per barrel in 2026, falling to $60 by 2029.
• The central bank said the adverse scenario could keep inflation above target for an extended period, while a more favourable outcome could allow interest rates to begin easing during the current year.

Nairametrics earlier reported that South Africa’s annual consumer inflation rose to 5.0% in June 2026 from 4.5% in May.

The increase in inflation has added to the uncertainty facing the South African Reserve Bank as it balances the need to contain price pressures with concerns over economic activity.

The latest decision also comes as other African central banks maintain cautious monetary policy stances amid global economic and geopolitical uncertainty.

What you should know

The Central Bank of Nigeria retained its Monetary Policy Rate at 26.5% at the 306th meeting of the Monetary Policy Committee held in Abuja on July 20 and 21, 2026.

The Bank of Ghana also maintained its benchmark interest rate at 14% as policymakers assessed inflation risks linked to renewed geopolitical tensions in the Middle East.

South Africa’s decision to keep its key rate at 7% therefore reflects a cautious approach as the central bank monitors inflation expectations, global oil prices and the potential economic impact of the conflict in the Middle East.