Repo rate stays at 7% as SARB watches inflation risks

The South African Reserve Bank (SARB) has opted to keep the repo rate steady at 7% in its September meeting, following two consecutive cuts earlier this year. This decision reflects concerns around upside inflation risks from food, electricity and fuel, despite the relief of a stronger rand.

Momentum Investments unpacks what this cautious hold means for growth, inflation and interest rate expectations going forward. Key highlights include:

• Why the SARB’s decision signals a more measured approach to inflation management.
• The positive surprise in second-quarter GDP and its implications for the growth outlook.
• Revised inflation projections amid electricity tariff hikes and slower declines in fuel prices.
• The likelihood of one more potential rate cut before year-end, depending on global and local developments.

Please find the full report attached.