South African Reserve Bank expected to reverse easing cycle after inflation hits two-year high on fuel and core pressures.
The South African Reserve Bank (SARB) is poised to raise interest rates by 25 basis points to 7.25%, reversing a third of its 2024–25 easing cycle. The move follows a sharp reacceleration in inflation, driven by surging fuel prices and core components exceeding targets.
Inflation climbed to 5% year-on-year in June, the fastest pace in two years, with gasoline prices up 35% from the previous year. Core inflation, excluding food and energy, also rose to 4.1%, surpassing the SARB’s target and signaling broader price pressures.
Analysts argue the ZAR’s outlook hinges on the SARB’s resolve to maintain a hawkish stance, with further tightening likely if inflation persists.