South Africa’s Reserve Bank is preparing to announce its latest interest rate decision on Thursday, 29 May at 15:00.
•MPC set to announce latest repo rate
This rate, known as the repo rate, is the main tool the central bank uses to control inflation and influence the economy. The current repo rate is 7.50%.
When the Reserve Bank raises the repo rate, it becomes more expensive for commercial banks to borrow money. These banks usually pass those costs on to consumers through higher loan and bond repayment rates.
On the other hand, if the rate is cut, loans generally become cheaper. Keeping the rate the same means there is no change in these costs for consumers and businesses.
The upcoming decision will be made by the Monetary Policy Committee (MPC), which is led by Reserve Bank Governor Lesetja Kganyago. Many analysts expect the repo rate to remain unchanged, and the country’s recent economic data gives a clue as to why.
Inflation, which is the rate at which prices for goods and services increase, remains within the Reserve Bank’s target range of 3% to 6%. The most recent data shows that consumer inflation was 2.8% in April—just slightly above March’s 2.7%. Inflation on food and non-alcoholic beverages was 4.0%, the highest it’s been since September 2024.
Although this food-related inflation is creeping up, overall inflation is still considered low.
When inflation is low, the Reserve Bank usually avoids raising interest rates because there is no urgent need to reduce demand for goods and services.
Unemployment remains a major concern. Statistics South Africa reported that the country’s unemployment rate rose to 32.9% in the first quarter of 2025, up from 31.9% in the previous quarter.
In simple terms, fewer people have jobs, and the number of unemployed people increased by 237,000. A higher repo rate could make economic recovery even harder by increasing costs for businesses and consumers.
Interest rates in the money market also reflect expectations that the repo rate will stay stable.
For example, short-term rates on government Treasury bills and negotiable certificates of deposit (NCDs) are closely aligned with the current repo rate. The 91-day Treasury bill is at 7.33%, and the 6-month NCD is at 7.53%. These numbers suggest that investors and banks do not expect any drastic rate changes.
The prime lending rate, which is the rate banks charge their most trusted customers, currently sits at 11.00%.
This rate usually moves in line with the repo rate. So if the repo rate remains at 7.50%, the prime rate is also likely to stay the same.
Economic experts continue to monitor the exchange rate of the rand, which sits at around R17.91 to the US dollar. A weaker rand can lead to imported goods becoming more expensive, which might eventually push up inflation.
Given the balance between stable inflation and rising unemployment, the Reserve Bank is likely to keep the repo rate steady. An economist from Anchor Capital noted that the increase in unemployment is putting pressure on the country’s recovery.
Governor Kganyago will deliver the official MPC statement on Thursday. Until then, the data suggests that South Africans should not expect major changes to their interest payments on home loans or car financing.