South Africa raises key rate to 7.25% — Daily Maverick

In South Africa, the Monetary Policy Committee of the South African Reserve Bank unanimously raised the key interest rate by 25 basis points, from 7.00% to 7.25%. As Daily Maverick reports, the banks’ prime lending rate subsequently rose from 10.50% to 10.75%, making mortgage and car loan payments more expensive.

Inflation and economic outlook

Headline inflation stood at 4.4% in August 2026, and it is forecast to peak at 5.7% in November. Services inflation reached 5.1% in August. According to Sanlam Investments economist Patrick Buthelezi, it may affect wages and inflation expectations.

South Africa’s economy contracted by 0.2% in the second quarter of 2026. Against this backdrop, the South African Reserve Bank revised its forecast for the country’s GDP growth for all of 2026 to 1.2%.

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Economists’ and consumers’ reaction

PSG Financial Services chief economist Johann Els believes the unanimous decision was more hawkish than he expected. At the same time, he forecasts that there will be no further rate hikes under current conditions, as supply shocks ultimately weaken demand and economic growth.

Buthelezi suggested that monetary policy could remain tight for a long time. Debt Rescue CEO Neil Roets said that higher borrowing costs increase pressure on households and small businesses, limiting opportunities for expansion and hiring.

PayJustNow Chief Operating Officer Dean Hyde noted that consumers are not necessarily giving up spending, but are planning the timing of purchases and payment methods more carefully.