South African Reserve Bank Holds Repo Rate at 6.75%

The South African Reserve Bank on Thursday maintained its benchmark repo rate at 6.75 percent, opting for caution amid rising inflationary risks fueled by the ongoing conflict in the Middle East. The unanimous decision by the Monetary Policy Committee in Pretoria reflects a shift from earlier expectations of rate cuts, as higher global oil prices and a weakening rand threaten to push inflation above the bank's 3 percent target.

Governor Lesetja Kganyago announced the hold during a media briefing, emphasizing the need for a prudent approach in an uncertain global environment. "We warned of elevated risks, and we have been proceeding cautiously in our rate setting," Kganyago said. "Now a crisis has hit, this prudent approach is proving appropriate." He noted that the conflict, involving the United States and Israel against Iran, has driven sharp increases in commodity prices, including oil, which recently traded above 100 dollars per barrel. The rand has depreciated more than 6 percent against the U.S. dollar since the war's escalation, exacerbating import costs for South Africa, a net importer of petroleum products.

Inflation stood at 3 percent in February, aligning precisely...