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Reserve Bank Governor Lesetja Kganyago speaking at the Monetary Policy Committee on 28 May 2026.
The South African Reserve Bank (SARB) has indicated that in the worst-case scenario, South Africans may see three more interest rate hikes this year.
This scenario accounts for higher food inflation on the back of higher fuel prices, elevated fertilizer costs, an extended blockade in the Strait of Hormuz and adverse weather patterns which threaten crop production.
The bank has decided to increase rates by 0.25%, which takes the policy rate to 7% and the prime lending rate to 10.5%.
Reserve Bank Governor Lesetja Kganyago says geopolitical tensions and an EL Nino, which brings about drought, will push inflation as high as 6%.
“It is not so much that we have had a food shock, but we expect that to be coming because of the following. Firstly, we’re lucky that the planting season for the summer for the crops was already done before the shock was done. The winter crop will fill it, but agriculturists tell us that they are not as demanding on fertiliser as the summer crops are and so if there is indeed a food shock that’s why we modelled the El Nino, that will be an additional shock.”
SARB hikes interest rates:
