The South African Reserve Bank held interest rates steady and warned that policy tightening may be warranted if the Iran war drags on, impacting oil prices.
The five-member monetary policy committee kept the benchmark rate at 6.75%, Governor Lesetja Kganyago told reporters in Pretoria on Thursday. That matched the forecast of all 15 economists in a Bloomberg survey. The decision was unanimous, as predicted in a separate Bloomberg poll.
“The latest forecasts from our Quarterly Projection Model show rates unchanged for a longer period, postponing the cuts from the January projections,” Kganyago said. “The policy stance is treated as moderately restrictive, which helps bring inflation back to target.”
Benchmark government bonds erased declines, with the yield on 2036 securities falling eight basis points from a session-high to 9.11%, just one basis point higher on the day.
The rand pared a decline against the dollar to trade 0.3% weaker at 17.0266 as of 3:28 p.m. in Johannesburg.
The rand plays a “role as a shock absorber for the South African economy,” and based on past experience some investors with offshore exposure may take the opportunity to repatriate funds, Kganyago said.
Policymakers also held borrowing costs steady in January, citing concerns including geopolitical uncertainty. That caution was viewed by analysts as winning them time to stand pat at this meeting.
“In previous meetings, we warned of elevated risks, and we have been proceeding cautiously in our rate setting,” Kganyago said. “Now a crisis has hit, this prudent approach is proving appropriate.”
South Africa imports all its oil, the price of which has surged more than 40% since the US and Israel attacked Iran on Feb. 28. That’s put the central bank’s 3% inflation goal at risk.
Read More: South Africa: Limpopo to Host Africa Tourism Leadership Forum 2026 – Key Details You Need to Know
