JOHANNESBURG, July 23 (Xinhua) -- The South African Reserve Bank (SARB) on Thursday kept its benchmark repo rate unchanged at 7 percent despite a recent acceleration in inflation.
SARB Governor Lesetja Kganyago said that the Monetary Policy Committee voted 4-2 to leave the repo rate unchanged, with two members supporting a 25-basis-point increase.
The decision came after Statistics South Africa reported on Wednesday that annual consumer inflation rose to 5 percent in June from 4.5 percent in May, moving further away from the central bank's preferred 3 percent target.
Kganyago said while the inflation outlook has "improved slightly," it still remains too high with slow growth.
"The committee agreed that the outlook is uncertain, and with the rate increase at our previous meeting, the policy stance is appropriate for now, with rates somewhat restrictive," he said.
Kganyago attributed the recent inflationary pressure largely to higher fuel prices caused by supply disruptions linked to the conflict in the Middle East, saying that the shocks had weighed on household spending and investment, while "municipal dysfunction has become a binding constraint on growth."
The central bank expected economic growth to recover in the second half of the year as external shocks ease and domestic reforms gradually take effect.
It added that growth was resilient in the first quarter of 2026 but is likely to remain subdued through the second and third quarters.
"We are setting policy to achieve 3 percent inflation over time, ensuring the current supply shock does not de-anchor inflation expectations," said the governor.
