The South African Reserve Bank has decided to keep its benchmark interest rate unchanged at 7%, contradicting expectations amid rising inflation driven by fuel prices.The Monetary Policy Committee (MPC) was split, with four members voting to maintain the status quo and two favoring a 25-basis point increase.Governor Lesetja Kganyago cited an improved but still high inflation outlook, noting that fuel costs remain the primary driver.Consumer inflation reached a two-year high of 5% in June, largely due to elevated transport costs linked to global oil market volatility.

While the rand has remained resilient against major currencies, the Bank warns that inflation risks persist, with forecasts suggesting rates may stay above the 4% target until early next year.Economic growth is expected to slow through Q3 2026, though recovery is anticipated in the second half of the year if global conditions stabilize.The decision highlights ongoing tensions between controlling inflation and supporting economic growth.