The South African rand depreciated to ZAR 16.7 per US dollar, its weakest level since May 19, after the South African Reserve Bank (SARB) unexpectedly kept its benchmark repo rate unchanged at 7.0% at its July meeting. The decision, passed by a 4–2 majority, ran counter to market expectations for at least a 25-basis-point increase.
The SARB pointed to a modest improvement in the inflation outlook and softer economic growth, while reiterating its commitment to returning inflation to its 3% target over time. Governor Lesetja Kganyago cautioned that renewed conflict in the Middle East—already driving up oil and fertilizer prices—could necessitate further monetary tightening if higher fuel costs spill over into food prices and core inflation.
South Africa’s annual headline inflation accelerated to 5.0% in June, the highest level in two years, while core inflation rose to 4.1%, its strongest reading since September 2024. Both remain above the upper bound of the SARB’s 3% ±1 percentage point target range.
