IN SHORT: South Africa’s Monetary Policy Committee cut the repo rate by 25 basis points to 6.5% on May 29, effective May 30, resuming the easing cycle that had been paused since November 2025. Five members voted for the cut and one preferred a larger 50 basis point reduction. The prime lending rate falls to 10%. The decision updates the preview Africaspoint published Tuesday: South Africa’s rate decision lands Thursday.
The South African Reserve Bank has resumed cutting interest rates after a two-meeting pause, bringing the repo rate to 6.5% as Governor Lesetja Kganyago and a clear majority of the Monetary Policy Committee concluded that inflation’s trajectory toward the new 3% target provides sufficient room to ease borrowing costs despite oil price pressure from the Hormuz disruption. The decision was announced at the SARB’s Pretoria headquarters after a two-day MPC meeting. Five of the six members voted for a 25 basis point cut. One member preferred a more aggressive 50 basis point reduction, signalling that a minority believes the easing cycle should accelerate.
- The repo rate moves from 6.75% to 6.5% effective May 30. The prime lending rate at commercial banks falls from 10.25% to 10%. This is the fourth 25 basis point cut in the current cycle, which began in September 2025, and brings the cumulative easing to 100 basis points from the cycle peak of 7.5%.
- South Africa’s headline CPI was 3.1% in March 2026, near the floor of the SARB’s revised 3% to 4.5% target band. The rand has strengthened against a weakened US dollar, reducing imported inflation pressure despite Brent crude above $120 per barrel. The benign domestic inflation environment provided the decisive argument for a majority of the MPC.
- The dissenting member who voted for 50 basis points represents the view that with inflation already near target and the economy growing below potential at approximately 1.5%, the SARB has more room to ease than a cautious 25 basis point move implies. The vote split signals the cut may not be the last in the near term.
- The SARB’s quarterly projection model now points to the repo rate ending 2026 at approximately 6.25%, implying one more cut before year-end. That path is conditional on the Hormuz situation not escalating into a wider inflation shock and on domestic CPI remaining well-behaved through the June and July prints.
- For South Africa’s 1.7 million mortgage holders, the move from prime 10.25% to 10% reduces monthly repayments by approximately R160 on a R1 million bond over 20 years. For businesses carrying variable-rate debt, the cumulative 100 basis points of easing since September 2025 represents meaningful cost relief.
The SARB’s decision to cut despite Brent above $120 per barrel is a statement of confidence in the disinflation trajectory and in the rand’s resilience as a shock absorber. The March CPI of 3.1% was the last clean read before Hormuz-driven fuel price increases feed through into the April and May prints. If the April CPI, due in late May, shows a sharp uptick driven by fuel costs, the next MPC meeting in July will face a more difficult decision. Kganyago’s forward guidance will be watched closely for any signal that the July meeting is conditional on inflation data.
The Bigger Picture: South Africa has now cut rates by 100 basis points in eight months, bringing the repo rate to its lowest level since early 2023. The economy is growing, load-shedding has ended, inflation is near target, and the current account is in a manageable position. The Hormuz shock is the principal risk to the easing path. If Brent remains above $120 through Q3, April and May CPI prints are likely to show fuel-driven acceleration that constrains the July decision. If the Hormuz situation de-escalates and oil retreats toward $90, the SARB’s quarterly model path to 6.25% by year-end becomes more credible. For now the easing cycle is back. Whether it continues depends on a war in the Gulf.
Source: South African Reserve Bank, May 29 2026 / Moneyweb, May 29 2026
