Will the Reserve Bank Hike Rates Again? Economists Are Split
Fuel price relief has cooled South Africa’s inflation outlook, but economists still disagree on what the Reserve Bank (SARB) will do at its final Monetary Policy Committee (MPC) meeting of the year. Nedbank expects a 25-basis-point hike, while Investec, Old Mutual and the SARB’s own model point towards a hold. The decision comes on 19 November 2026.
The case for a hike: Nedbank
Nedbank anticipates a 25-basis-point hike at the November meeting. It had called the hike before last week’s Medium-Term Budget Policy Statement (MTBPS), following September inflation of 4.5%. That print was cooler than the 4.7% to 5.0% markets expected, but inflation was still expected to rise in October and November on fuel price increases. Nedbank then saw inflation peaking at 6.4% in November, assuming a R1.50-per-litre fuel hike.
What changed: fuel price relief
The outlook shifted when Finance Minister Enoch Godongwana announced R10 billion in fuel price relief, through fuel tax cuts of R1.50 per litre on petrol and R3.00 per litre on diesel. With that relief, fuel prices are now set to be cut in November.
In its post-budget review, Nedbank now expects inflation to peak in October at 5.7%, then move towards the SARB’s 3% target more quickly in 2027.
Even so, Nedbank’s call hasn’t reversed. It says the outlook remains uncertain, with ongoing Middle East tensions posing upside risks to oil prices and domestic fuel costs. It expects inflation to stay above the 3% target for an extended period, and sees a higher risk of second-round effects from persistently high fuel prices.
The case for a hold
Investec’s Annabel Bishop says market signals suggest no hike. The rand’s current weakness is one sign. With the US expected to hike again this year and South Africa not expected to follow, the interest rate differential is expected to narrow, which puts pressure on the rand.
Old Mutual’s Izak Odendaal sees little reason for the SARB to push rates higher. Inflation is likely to stay between 4.5% and 5% over the next few months, but he views it as temporary. By April next year, high fuel prices will be in the base for year-on-year comparisons, and inflation should fall towards a “three-handle” quickly. In his view, further hikes are probably unnecessary and unlikely.
If inflation does anchor at 3%, he says the policy rate could eventually settle around 5.5% to 6%, down from the current 7.25%. That would be positive for interest-rate-sensitive investments and consumer spending.
What the SARB itself is signalling
The Reserve Bank’s own view is mixed:
- The model: The Quarterly Projection Model has the policy rate broadly stable for the rest of the year, with cuts later as inflation falls to 3%.
- The caveat: The SARB says it doesn’t follow the model strictly and decides meeting by meeting based on the latest data.
- The scenarios: In September, it modelled tougher outcomes, from another hike with a slower path of cuts to two hikes and rates held higher for longer.
- The approach: The bank says it aims to look through the initial effects of price shocks while making sure they don’t entrench higher inflation.
If inflation cools as now expected, the case for further hikes could soften.
Views at a glance
| Source |
Expected November outcome |
Key reasoning |
| Nedbank |
25bp hike |
Inflation above target for long, second-round risks |
| Investec (Bishop) |
No hike |
Rand weakness signals markets don’t expect a hike |
| Old Mutual (Odendaal) |
Hike unlikely |
Fuel effect is temporary, inflation falls by April |
| SARB QPM |
Stable rate |
Cuts later in the forecast period |
What it means for you
- Borrowers: A hike would raise bond and credit repayments, while a hold keeps them steady at the current 7.25% repo rate.
- Savers and investors: Falling inflation and eventual cuts would favour interest-rate-sensitive investments.
- Planning: Avoid assuming either outcome. Build a little room into your budget in case rates rise.
The bottom line
Fuel relief has softened the inflation outlook, but not enough to settle the debate. Watch the October and November inflation data and the oil price ahead of the MPC announcement on 19 November.
Source: Nedbank, Investec, Old Mutual and SARB commentary, as reported in the original article.
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