SARB: Holding at 7, Waiting for 3?

Research evidence excerpt

SARB: Holding at 7, Waiting for 3?

Idea

July 23, 2026 06:12 PM GMT

RMB Morgan Stanley Proprietary LimitedMSouth Africa Economics | Europe Andrea Masia

Economist

SARB: Holding at 7, Waiting for Andrea.Masia@rmbmorganstanley.com +27 11 587-0820

3?

The SARB surprised by holding its policy rate steady today, a

rare instance where market participants were caught off-guard. Exhibit 1 : SARB versus RMB Morgan Stanley

headline CPI forecast

We do not expect a catch-up hike in September, instead we see a

9.0 Headline forecast

CPI, %Ydelayed resumption of the SARB's easing cycle. 8.0

There are very few occasions when market participants get caught off-guard by a 7.0

6.0

SARB policy rate decision. Today was one such occasion: The sell-side consensus

5.0

was overwhelmingly of the view that a 25bp increase would be delivered; market-

4.0

makers and buy-side investors shared that view with some even suggesting 50bp 3.0

was on the table. Actually, the MPC kept rates on hold and as a result USD/ZAR 2.0

gapped 1.7% higher, 2s10s steepened 23bp and 1y1y-5y5y rose 33bp. Consumer 1Q15 SARB1Q17(July) 1Q19 SARB1Q21(May) 1Q23 RMB1Q25Morgan1Q27Stanley

discretionary stocks were the only domestic earners that closed up on the day, and Source: Stats SA, SARB, RMB Morgan Stanley Research forecasts

only marginally at that. Not even the banks were spared. Our measure of the

statement's tone was hawkish (see Exhibit 6 and 7) and from it we make several key Exhibit 2 : SARB versus RMB Morgan Stanley

observations: core CPI forecast

• The SARB's near term inflation forecasts were revised lower, as expected. 9.0 Core forecast

8.0 CPI, %Y

The committee does however acknowledge that inflation risks are skewed to

7.0

the upside with "most [services] components now well above 3%", its medium