Experts mostly expect interest rates to remain unchanged next week. The Monetary Policy Committee (MPC) is expected to meet next week Thursday for the first interest rate announcement of 2026.
Neil Roets, the CEO of Debt Rescue, said that they believe that, while a further interest rate cut remains possible, the balance of factors suggests it is more likely that the South African Reserve Bank (SARB) will keep interest rates unchanged at the next MPC meeting. “There are several moving parts influencing this decision, and the SARB will ultimately weigh both domestic inflation conditions and global risks before taking the next step in the rate-cutting cycle.”
Roets added that the SARB has reduced interest rates by a cumulative 150 basis points since the start of the current cutting cycle — bringing the repo rate down to 6.75% and the prime lending rate to 10.25% — consumers remain under intense financial pressure. “The cost of living is still stubbornly high, and many households continue to spend the bulk of their income on basic essentials such as food, transport, electricity, medical costs and school-related expenses.”
Benay Sager, the executive head of DebtBusters, said inflation numbers that come out during the course of this week will decide the interest rate decision. “It’s a bit difficult to say before seeing those. We would certainly welcome a reduction in the interest rate on behalf of consumers, but we’re not expecting one from the MPC next week, especially if the inflation rate is higher than what was budgeted for a few months ago. If the inflation rate comes in a lot lower than anticipated, then we’ll expect an interest rate cut.”
Sager added that for a cut to happen, inflation would have to be really low, and then we would expect the Reserve Bank to have considered some of the global uncertainty and decided that it’s not an important factor. “For interest rates to stay the same, I think if the inflation numbers come in a little bit higher than predicted, or higher than what they have been over the last six to nine months, we’d anticipate the interest rate to remain unchanged. We know that an interest rate reduction would certainly support consumer spending, but we’re not really expecting it.”
Sager said it’s early in the year and a lot can happen, and a lot can change. “We do expect them to look at lowering interest rates over time, but there is also a lot of conversation about prime interest rates and so on. So there may be one interest rate cut, somewhere during the course of the year – but depending on how the second part of the year turns out with inflation and all the global uncertainty, there may even be a case for interest rate increases.”
Professor Waldo Krugell, an economist at North-West University, said he thinks the MPC is short on excuses not to cut with another 25bps. “The international uncertainty is actually working in the favour of the exchange rate and gold price. Overall there is little domestic price pressure and they can afford to cut without a chance of fueling inflation. Their concerns will be food prices in the light of foot and mouth disease and recent floods.”
Professor Raymond Parsons of the North West University Business School said there is likely to be further good news for business and consumers on the interest rate front as 2026 unfolds. “The SARB is now projected to continue to ease interest rates in the months ahead. In November 2025 the SARB already held out the prospect that, with an improved inflation outlook emerging, underpinned by a strengthening rand and softer oil prices, there would be space to further ease borrowing costs this year.”
Parsons added that the latest data indeed indicates that the economy is now set to benefit from lower interest rates during the course of this year, at this stage probably being two cuts of 25 bps each. “The SARB decision, as always, will be data-driven. However, the jury is still out on whether the first cut will come at the January or March meetings of the Monetary Policy Committee.”
Unisa economist Dr Eliphas Ndou said the decreases in fuel prices, a strong exchange rate and the drifting of average inflation expectations below 3.9 percent, all indicate subsiding inflationary pressures in the near future. “I, therefore, expect a cut in the repo rate at the January meeting. In addition, both the average 2-year-ahead and the average 5-year-ahead inflation expectations indicate weak inflation pressures, supporting further cuts in the repo rate in 2026.”
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