Repo Rate Held Steady at 6.75%: Why the SARB is Playing it Safe in 2026
SARB Repo Rate January 2026. Image Source: Daily Maverick
In its first high-stakes meeting of 2026, the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has voted to keep the repo rate unchanged at 6.75%. While many South African households were hoping for a follow-up to November’s 25-basis-point cut, the central bank has signaled a “wait-and-see” approach amidst a global landscape fraught with geopolitical volatility.
The decision keeps the prime lending rate steady at 10.25%, leaving the cost of borrowing for home loans and vehicle finance unchanged for the next two months.
The SARB Decision: A Split House
The decision was far from unanimous. Reserve Bank Governor Lesetja Kganyago revealed that the committee was split, with four members voting to hold and two members advocating for a 25-basis-point cut.
Governor Kganyago emphasized that while domestic inflation is behaving, global “shocks” are keeping the bank on high alert.
“Last year was a watershed for our economy, but 2026 has begun with a new round of shocks,” Kganyago noted. “Geopolitical tensions remain elevated, reflecting what appears to be a rupture in the global political order.”
Why Interest Rates Didn’t Drop: The 3% Target
The SARB is currently on a mission to anchor South Africa’s inflation at its new “point target” of 3%. While headline inflation was recorded at 3.6% in December 2025, the bank wants to ensure that “services inflation”—currently hovering above 4%—cools down before providing more relief to consumers.
Economic Indicators at a Glance (January 2026):
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Repo Rate: 6.75% (Unchanged)
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Prime Rate: 10.25% (Unchanged)
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December Inflation: 3.6%
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GDP Forecast 2026: 1.4% (Steadier growth phase)
The Silver Lining: Significant Fuel Price Relief Ahead
While interest rates remain static, South African motorists are set for a major win at the petrol pumps in February. A surging Rand and a temporary dip in global oil prices have paved the way for a sizeable “over-recovery.”
According to the latest data from the Central Energy Fund (CEF), fuel prices are projected to decrease significantly on Wednesday, February 4:
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Petrol 95: Expected decrease of 66 cents per litre.
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Petrol 93: Expected decrease of 64 cents per litre.
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Diesel (0.005%): Expected decrease of 60 cents per litre.
The “Rand Rally” Factor
The Rand has been the “star performer” of early 2026, recently breaking below the R16.00/$ mark for the first time in years. This currency strength is acting as a natural hedge, shielding local consumers from the volatility of Brent Crude oil prices, which have spiked due to tensions in the Middle East and new US trade tariff threats.
The Consumer Outlook: “Janu-worry” Meets February Relief
For the average South African, the combination of a steady repo rate and a fuel price drop creates a mixed but cautiously optimistic financial outlook.
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Homeowners: Monthly bond repayments will remain the same, but the prospect of further rate cuts in March or May remains high according to the bank’s Quarterly Projection Model.
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Commuters: The fuel price cut will provide immediate “pocket relief,” potentially lowering the cost of transport and logistics, which could further dampen food inflation later in the quarter.
Looking Ahead: When is the Next Cut?
Economists at major banks like FNB and Nedbank remain divided. While FNB anticipates that the SARB will front-load cuts in the first half of the year, others suggest that the “hawkish” stance today means the next 25-basis-point drop may only arrive in March 2026.
As we navigate this “new normal” of 3% inflation targeting, one thing is clear: the SARB is prioritising long-term stability over short-term stimulus.
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