SARB holds rates at 7% as inflation risks and weak growth pull in opposite directions
Market Note | Monetary Policy Committee Decision | 23 July 2026
The South African Reserve Bank’s Monetary Policy Committee left the policy rate unchanged at 7% on 23 July 2026, with four members supporting the hold and two preferring a 25 basis point increase. The prime lending rate remains at 10.50%. The decision follows May’s quarter-point hike and caught markets off guard, with the rand weakening sharply on the announcement after consensus had positioned for further tightening.
The hold came despite an uncomfortable inflation backdrop. Just two days earlier, Statistics South Africa reported that June consumer inflation had accelerated to 5%, from 4.5% in May, as elevated oil prices, with the Strait of Hormuz still largely closed, continued to feed through into fuel and food costs. Governor Lesetja Kganyago acknowledged the tension directly, noting that while the inflation outlook has improved slightly since the previous meeting, inflation remains too high at a time when growth is weak.
Growth considerations clearly weighed on the Committee. The Bank expects activity to slow through the second and third quarters, following stronger-than-expected first-quarter momentum, as households absorb higher fuel prices and uncertainty dampens investment. Its baseline forecast sees the economy beginning to recover in the second half of the year as the shock fades. Kganyago also pointed to the escalation of the Middle East conflict disrupting supply chains, alongside the global artificial intelligence boom, which is driving data centre investment and shaping GDP and capital formation trends.
The pause should not be read as the end of the cycle. The Governor stressed that risks remain skewed to the downside for growth and the upside for inflation, and that the MPC will act as needed to return inflation to its 3% target. With two members already voting for a hike, September remains firmly in play.
Sources: South African Reserve Bank, Statement of the Monetary Policy Committee (23 July 2026); Statistics South Africa; media coverage of the MPC announcement.