Market News

BY  Sfundo Parakozov, Bhargav Acharya and Kopano Gumbi

Key Points

• SARB holds repo rate after three cuts
• Most analysts had predicted the pause
• Inflation remains well-contained
• But Trump’s tariffs, deadlocked budget pose risks

PRETORIA, March 20 (Reuters) – South Africa’s central bank paused its rate-cutting cycle on Thursday as risks stemming from U.S. President Donald Trump’s global trade war and the country’s deadlocked national budget overshadowed its success keeping inflation low.

The South African Reserve Bank’s split decision to keep the repo rate at 7.50% was in line with the median forecast of economists polled by Reuters and follows rate cuts at the previous three monetary policy meetings.

Four members supported an unchanged stance and two preferred a 25 basis point cut.

Governor Lesetja Kganyago told a press conference: “The global economy is not on a stable footing and there are also domestic uncertainties, … this calls for a cautious policy approach.”

Annual inflation was unchanged at 3.2% in February, staying near the bottom of the central bank’s target range of 3% to 6%.

The rand has proved resilient so far this year, gaining more than 3% against the U.S. currency in 2025 despite relations with the Trump administration souring badly over South Africa’s land reform policies and genocide case against Washington’s ally Israel at the World Court.

The most contentious part of the budget, which does not yet have enough support in parliament to pass, is a proposed increase in value-added tax of 1 percentage point spread over two years, which is expected to add to inflation.

(Additional reporting by Bhargav Acharya; Editing by Alexander Winning)