The South African Reserve Bank (SARB) is expected to hold interest rates steady at its upcoming meeting on March 20, according to a poll. The decision comes as global trade uncertainties and ongoing political disputes over the national budget keep policymakers in a wait-and-see stance.
This comes after Finance Minister Enoch Godongwana’s proposal for a more modest value-added tax (VAT) increase in the 2025 budget was rejected by key political parties. Negotiations over the budget are ongoing as the government seeks to resolve differences over VAT.
The Reuters survey, conducted this week, found that 16 out of 22 economists believe the SARB will maintain the repo rate at 7.50% at next week’s meeting, while six predict a 25 basis point cut to 7.25%.
Goldman Sachs economist Andrew Matheny noted that the ongoing budget uncertainty suggests the SARB will likely pause rate cuts in March. However, rates are expected to be reduced by 25 basis points to 7.25% in May, with no further changes anticipated for the remainder of the year.
Shannon Bold, senior economist at the Bureau of Economic Research, pointed to concerns over inflationary pressures, including the proposed VAT increase. Inflation, which rose to 3.2% in December, is forecast to increase further, averaging 4.0% in 2025 and 4.5% in 2026.
Other risks to the economy include the potential for tariffs on South African imports by the Trump administration, which has criticized the country’s land reform policy, as well as the impact of a weaker rand. Economic growth is expected to reach 1.7% in 2025, with a slight increase to 1.8% in 2026.