The South African Reserve Bank (SARB) has raised the repo rate by 25 basis points to 7.25%, with the new rate coming into effect today, 25 September. The prime lending rate rises accordingly to 10.75%. The monetary policy committee (MPC) voted unanimously in favour of the increase.
Lesetja Kganyago, president of the South African Reserve Bank, said the decision comes amid heightened uncertainty and greater inflation risks, particularly due to higher fuel prices. Inflation currently stands at 4.4%, while the SARB expects inflation to rise above 5% later this year and early next year before it begins to decline again. The bank currently expects inflation to return to the 3% target by the end of 2027.
The SARB has also lowered its growth forecast for South Africa's economy for 2026 from 1.4% to 1.2% after the economy contracted by 0.2% in the second quarter. The bank says the repo rate may remain largely stable for the rest of the year, but emphasises that future decisions will depend on economic data and the balance of risks.
What does it mean for you?
People with debt linked to the prime lending rate will now pay more interest. This includes many home loans, vehicle financing and other credit agreements. The exact amount by which a person's instalment changes depends on the outstanding balance, remaining term and the interest rate on the individual loan. The SARB points out that banks determine actual lending rates according to factors including their funding costs, risk and client profile.
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This article is an automatic English translation of a Nuusflits article originally published in Afrikaans. Read the Afrikaans original.
