Sarb will announce its next interest rate decision on 23 September 2026.
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The United States (US) Federal Reserve’s decision to raise interest rates has put the spotlight back on global monetary policy, but South African households are unlikely to face another blow from the South African Reserve Bank (Sarb) next week, with economists expecting the central bank to keep the repo rate unchanged rather than increase borrowing costs.
The US Fed hiked rates by 25 basis points to a target range of 3.75% to 4% on Wednesday, 17 September 2026. The Sarb Monetary Policy Committee (MPC) is set to deliver the second-to-last repo rate announcement next week, Wednesday, 23 September 2026.
Johann Els, chief economist at PSG Financial Services, said he believes the MPC will keep rates unchanged.
“I think the Reserve Bank will keep rates unchanged. I do not think the Fed’s decision will have a significant impact on the Reserve Bank. Even if the Fed hikes, I still think the Reserve Bank will keep rates unchanged.”
Relief for SA households
Els’ comments comes after the Bureau of Economic Research (BER) released its long-term inflation expectations. The survey showed unchanged or lower inflation expectations for the current year and over five years.
Simply put, this suggests that BER expect prices of goods and services to ease or remain contained.
“This is very encouraging,” said Els. “While most of the expectations did not decline to levels seen in the first quarter, they were down from the second-quarter survey numbers. Many expectations out there had expected them to be higher still.
“If we concentrate on household inflation expectations, these showed a significant decline in the third quarter. Between the second and third quarters, 12-month inflation expectations fell from 6% to 4.9% – the lowest level in about five years. So that would be very encouraging for the Reserve Bank in terms of inflation expectations driving actual inflation.”
Inflation over 5 years
According to the BER survey, the increase in professional inflation expectations seen in the second quarter stabilised in the third quarter. Current-year expectations remained at 4.4%, while five-year expectations eased from 4.1% to 4.0%.
Expectations for 2027 and 2028 edged lower to 4.0% and 3.8%, from 4.2% and 3.9% previously. Household inflation expectations declined sharply, reversing much of the increase recorded in the second quarter.
“When we look at inflation expectations for analysts for the current year, that was unchanged between the second and third-quarter surveys, slightly down for 2027. And for 2028, unchanged at 3.4%. The five-year expectations were also unchanged at 3.5%,” said Els.
Inflation for August will be released next week on Wednesday, 23 September 2026. Inflation for July declined to 4.3% from 5.0% in June.
Trade Union on wages
Els said trade union officials are also a fairly important group when we think about wage demands and the impact of wage growth on inflation, and that’s important for the Reserve Bank to watch closely.
‘Trade union inflation expectations were unchanged for the current year between the second and third-quarter surveys. For 2027, that’s down from 4.4% in the second quarter to 4.1%. And for 2028, down from 4.4% to 3.9%,” he added.
“The five-year outlook was down from 4.7% to 4.3%. This is crucially important in terms of inflation expectations driving wage demands and, ultimately, inflation, in terms of both trade union expectations and household expectations.”
Interest rates to remain unchanged
He viewed the expectations as encouraging, adding that he believes the MPC will keep interest rates unchanged because it hiked rates earlier in the year.
“I think the Reserve Bank will keep rates unchanged, not only because of the early rate hike in May, with many other central banks still having not moved interest rates. That very early rate hike limits the need for further rate increases, especially against the backdrop of these lower inflation expectations in the third quarter of this year.”
Els highlighted concern about ongoing high oil prices and inflation, but said that would likely be temporary and that oil prices will come down at some point. Basically, that will also help inflation. The fact that inflation expectations have come down is a key part of this argument.
