SARB's cautious approach: What it means for interest rates in May
The South African Reserve Bank(SARB) is likely to hold interest rates steady as they assess the longevity of the current inflation pressures and geopolitical tensions.
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The South African Reserve Bank (SARB) is expected to take a cautious approach in its upcoming interest rate decision later this month.
Interest rates are likely to remain unchanged amid rising inflation risks and global instability, says REMAX Southern Africa.
As the country awaits the Monetary Policy Committee (MPC) announcement on May 28, current economic indicators suggest that the SARB will maintain its current rates, reflecting a prudent response to ongoing inflationary pressures and increased global uncertainty.
According to Adrian Goslett, CEO and regional director of REMAX Southern Africa, the MPC is likely to hold interest rates steady as they assess the longevity of the current inflation pressures and geopolitical tensions.
“Although inflation has remained relatively stable in recent months, the underlying risks have shifted notably this year, and we therefore do not expect the SARB to rush into any policy changes at present,” explains Goslett.
The CEO says the Monetary Policy Committee Review for April 2026 further highlights that global disinflation has been interrupted by supply-side shocks, particularly the current geopolitical tension that has pushed up oil and commodity prices.
As a result, he says inflation is expected to increase during the year; however, it is likely to remain within the SARB’s target range of 3% to 6%.
Caution over action approach
“It’s evident that the SARB is adopting a caution over action approach, given the current inflation risks and global markets volatility that have distorted the upside movement we were seeing. While disappointing, it is understandable that policymakers will prefer to pause instead of prematurely cutting rates further,” says Goslett.
For the property market, a prolonged hold in interest rates could provide a degree of stability, even if it delays potential relief for homeowners and buyers.
While lower borrowing costs would support affordability, stability in the rate environment allows buyers and sellers to plan and make more informed decisions, says the estate agency.
On Wednesday morning, Bianca Botes, the managing director at Citadel Global, says that with United States (US) inflation climbing more quickly than anticipated, US rate hikes are now once again a reality.
Overnight swaps indicate a 40% chance of a Fed hike towards the end of the year, she says.
Diminished chances of a quick US-Iran resolution keep oil prices high
“Brent crude climbed yesterday, before blowing off some steam this morning, to trade at $106/barrel.
"Ongoing woes in the Strait of Hormuz and a diminishing likelihood of a swift resolution to the US-Iran war is keeping oil prices elevated. Gold is trading at $4,703/ounce, regaining some lost ground after slipping on yesterday’s inflation reading.”
Gold fell for a second day after accelerating US inflation lifted the odds of the Federal Reserve raising interest rates this year, says Reezwana Sumad, a research analyst at Nedbank CIB.
“Oil slipped after rising almost 8% over the past three sessions, as a resolution to the Middle East conflict remains elusive, with Iranian exports showing further strain from a US naval blockade of the Strait of Hormuz.”