Johannesburg, South Africa – The South African Reserve Bank (SARB) is expected to keep its benchmark interest rate steady at 7.5% despite a smaller-than-expected rise in consumer prices last month. The decision comes as policymakers weigh the potential impact of U.S. President Donald Trump’s trade policies on global inflation.
Most economists surveyed by Bloomberg anticipate Governor Lesetja Kganyago will maintain the rate after three consecutive quarter-point cuts, citing concerns over global economic volatility. The monetary policy committee (MPC) is expected to make a close call, with four members favoring a hold and two advocating for a cut.
Global Trade Tensions Weigh on SARB’s Decision
While domestic factors—such as South Africa’s struggling economy and February’s inflation rate of 3.2% (below the expected 3.4%)—support further rate cuts, analysts believe global uncertainties will take precedence.
Economist Patrick Buthelezi of Sanlam Investment predicts the MPC will pause rate adjustments, particularly as the U.S. Federal Reserve holds its stance on interest rates amid concerns over Trump’s tariff policies.
Since returning to the White House in January, Trump has aggressively pursued trade tariffs on U.S. allies and competitors, warning of reciprocal charges on imports starting April 2. His policies have caused long-term U.S. inflation expectations to spike at the fastest rate since 1993.
Impact on South Africa’s Economy
Should the U.S. Federal Reserve raise interest rates to counter rising inflation, South Africa may be forced to adjust its monetary policy to prevent further currency depreciation, Buthelezi warned.
“The SARB will have to respond if the rand weakens significantly due to global trade tensions,” he added.
According to Investec Bank Ltd. Treasury Economist Tertia Jacobs, while there are some disinflationary factors—including the rand’s recent performance and lower oil prices—the overall risk balance remains tilted to the upside due to uncertainty in global trade and financial markets.
Next Steps for SARB
With the MPC’s decision expected shortly after 3 p.m. on Thursday, analysts will be closely watching for signals on how the central bank plans to navigate South Africa’s economic challenges amid increasing global volatility.