The South African Reserve Bank (SARB) has increased the repurchase rate by 25 basis points to 10.50%, signalling that interest rates are likely to remain high for an extended period.This hike comes amid global uncertainty, including ongoing conflict in the Middle East, which has driven oil prices up to around $120 a barrel.For households with combined debts of around R1.55 million, this could mean an extra R400 a month in repayments, covering home loans, vehicle finance, and credit card debt.

SARB Governor Lesetja Kganyago emphasised that, despite external pressures such as floods in Cape Town and rising international rates, South Africa’s economic fundamentals remain solid.Economists warn that inflation risks are skewed to the upside, especially given imported inflation from higher fuel costs.

Household debt levels are at record highs, with many consumers relying heavily on unsecured loans and facing declining real salaries, which are down 2.7% year-on-year.

Analysts caution that further rate hikes could strain households already struggling with debt, while a high-for-longer rate environment may help stabilise the rand and curb imported inflation.Businesses are also expected to adopt a cautious approach to investment and expansion amid continued economic uncertainty.