SARB holds ZAR rates at 8.25% amid geopolitical turmoil

South Africa’s central bank, the SARB, kept its benchmark repo rate unchanged at 8.25% despite rising regional conflict risk, according to Commerzbank analysis. The Monetary Policy Committee delivered a unanimous hold, marking the fourth consecutive pause since November 2024 and keeping the rate at its highest level since 2009. Commerzbank says the SARB decision is a balancing act between inflation containment and growth pressure. Regional conflicts are disrupting supply chains, raising energy and shipping costs, and increasing inflation risks for an economy dependent on exports. SARB’s inflation credibility remains a key support for the ZAR: the bank maintains a 3–6% inflation target range and suggests rates will stay elevated until sustainable disinflation appears. Key figures cited include SARB’s CPI forecast averaging 5.8% for 2025 and GDP growth revised to about 1.2%. The article notes ZAR strength versus the USD—up about 2.3% since January 2025—and mentions foreign reserves of roughly $55.2 billion, providing import coverage. The analysis highlights three main conflict transmission channels: trade-route disruptions (higher import costs and delayed exports), commodity-price volatility (terms-of-trade deterioration and inflation pressure), and risk-premium/capital-flow volatility (driven by interest-rate differentials). For markets, the expectation is policy stability through 2025 unless conflict escalation changes the inflation path. Investors are said to be pricing only around 25 bps of cuts by year-end 2025, while watching SARB’s quarterly projections for any pivot signals.