A strong rand and steady inflation have some analysts eyeing an earlier-than-expected interest rate cut in January. Picture Credit: Daily Investor
By Aisha Zardad
South Africa – South Africa’s Reserve Bank’s Monetary Policy Committee (MPC) is set to meet next week for its first interest rate announcement of 2026, and economists are offering differing views on whether the bank will cut rates immediately or hold steady.
In November 2025, the bank lowered the repo rate by 25 basis points to 6.75%, marking a measured step in the ongoing easing cycle aimed at balancing inflation pressures and economic growth.
Some market commentators argue that a stronger rand, combined with steady commodity prices and slowing inflation trends, could provide room for the SARB to reduce interest rates again in January 2026—earlier than previously anticipated. Aluma Capital Chief Economist Frederick Mitchell noted that the rand’s performance and global conditions might justify an earlier cut.
However, analysts maintain that the MPC has historically been cautious with monetary policy. Investec Chief Economist Annabel Bishop said the SARB’s deliberate stance reflects a priority on ensuring inflation heads toward its new 3 % target, even as economic conditions shift. “We are in a very uncertain environment and it’s important we move with caution,” she said, highlighting the bank’s measured approach.
Despite speculation about an early move, other experts suggest the bank may opt to hold rates at the upcoming meeting to assess the impact of past cuts and monitor inflation more deeply before acting again. A recent Business Report analysis echoed this viewpoint, noting that while further cuts remain possible, the SARB may prefer to keep rates unchanged at this stage.
Looking beyond the week’s decision, most forecasts still expect more interest rate cuts over the course of 2026, with projected cumulative reductions as inflation trends confirm stability and economic growth remains modest.
As the decision date approaches, borrowers, investors, and businesses alike are watching closely, aware that South Africa’s interest rate path will significantly influence borrowing costs and economic activity throughout the year.
