South African Reserve Bank Holds Interest Rates Steady Amid Global Inflation Concerns

The South African Reserve Bank (Sarb) has decided to keep interest rates unchanged, a decision widely anticipated by economists and analysts. Governor of the Sarb noted the existence of inflation risks worldwide, citing elevated inflation in advanced economies such as the United States, the Euro area, the United Kingdom, and Japan. He suggested that rates are likely to remain high for an extended period due to these emerging inflation risks. Regarding South Africa's economic performance, growth experienced an uptick in the fourth quarter of the previous year, primarily driven by the household sector due to lower inflation and pension system withdrawals. However, overall growth for 2024 was 0.6%, slightly below expectations and worse than in 2023. The 2025 growth forecast has been revised down to 1.7%, attributed to subdued demand and supply-side fragilities. Risks to growth are assessed to be on the downside.