The South African Reserve Bank publishes its April Monetary Policy Review today, laying out the economic data and risk assessments behind last month’s decision to hold the repo rate at 7.50%.
Why it matters: The review lands as South African households absorb record fuel price increases. The prime lending rate at 11% means 2.3 million variable-rate mortgage holders will not see the relief they had expected after two consecutive cuts late last year.
The rate decision
The MPC voted unanimously on 26 March to pause its easing cycle, ending a run of two quarter-point cuts that had brought the repo rate down from 8.00%. Governor Lesetja Kganyago pointed to the “dramatic deterioration in the near-term inflation outlook” driven by fuel prices.
Headline inflation dropped to 3% in February, matching the lower end of the SARB’s target range. But the committee’s own projections show it climbing to around 4% in the second quarter as fuel increases feed through to transport and food costs.
The fuel shock
Petrol rose by R3.06 per litre on 1 April. Diesel climbed between R7.37 and R7.51 per litre. Finance Minister Enoch Godongwana offset part of the blow with a temporary R3 cut to the general fuel levy, but that measure expires in May.
The Strait of Hormuz crisis is the underlying driver. South Africa imports more than 65% of its refined fuel, leaving domestic prices almost entirely exposed to international crude movements and the rand exchange rate.
What the review will show
The Monetary Policy Review is a more detailed document than the post-meeting statement. It typically includes updated inflation fan charts, GDP growth projections, and the SARB’s assessment of whether the fuel shock is a temporary supply disruption or a trigger for broader inflation expectations to rise.
The distinction matters. If inflation expectations remain anchored, the SARB can resume cutting when fuel prices stabilise. If expectations drift upward, the committee may need to hold rates for longer or even raise them.
What happens next
The next MPC meeting is in late May. By then, the committee will have April CPI data and clarity on whether the Iran ceasefire holds. Wednesday’s ceasefire deadline is the single biggest variable in South Africa’s inflation outlook.