FX.co ★ SARB Leaves Rates on Hold

The South African Reserve Bank opted to maintain the repo rate at 7.5% during its March 2025 session, citing risks to economic stability that necessitate prudence. Although inflation is contained, it has experienced a slight increase. Specifically, inflation on goods remains subdued, whereas inflation for services is on the rise. Adjustments in VAT and the reweighting of the Consumer Price Index (CPI) have impacted the economic outlook. Nonetheless, reduced fuel prices and electricity tariffs have led to improved future projections. In February, the inflation rate held steady at 3.2%, marking its highest level in four months. The central bank anticipates a headline inflation rate of 3.6% for this year, with a projected rise to 4.5% next year. In terms of GDP growth, the economy demonstrated weak performance with a 0.6% growth rate in 2024, which fell short of expectations and slightly underperformed compared to 2023. Projections for 2025 have been downgraded to 1.7%, attributed to issues of weak demand and supply chain disruptions. For the first quarter of 2025, GDP growth is projected at 0.4% (quarter-over-quarter, seasonally adjusted), with an expected increase to 0.5% in the second quarter.