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South African Reserve Bank (SARB) Governor Lesetja Kganyago has indicated that lowering interest rates is unlikely in the immediate future due to economic volatility.
Speaking at the IMF and World Bank spring meetings in Washington, Kganyago highlighted that the conflict in the Middle East is driving up the costs of essential commodities like fuel and fertiliser.
He emphasised that as long as these pressures threaten to push inflation higher, a relaxation of monetary policy remains off the table.
The central bank is currently navigating this period of “wildly gyrating” prices by utilising various risk scenarios rather than providing firm forecast updates between its formal meetings.
While previous models in March considered oil prices averaging $94 a barrel, Kganyago noted that the global environment has shifted significantly since then.
The bank plans to develop and review updated economic scenarios this May to better understand the long-term impact on South Africa’s growth and price stability.
Despite the global uncertainty, the governor confirmed that South Africa is not currently facing fuel shortages.
However, the true impact of rising fertiliser costs on the agricultural sector will not be fully realised until the upcoming autumn planting season.
With the policy rate currently held at 6.75%, the SARB remains committed to a cautious approach, prioritising the containment of inflation over early interest rate relief.
