South African Reserve Bank Warns Second-Round Inflation Risks Are Rising, Sees Return to 3% Target Only in Late 2027
On Tuesday, October 6, 2026, the South African Reserve Bank (SARB) warned in its twice-yearly Monetary Policy Review that the risk of second-round inflation effects had become more pronounced. Reuters reported that the central bank cited oil prices staying higher for longer and El Niño clouding the outlook, noting that South Africa, as a net fuel importer, is particularly exposed to global oil shocks.
The bank said it expects inflation to fall back to its 3 percent target only in the fourth quarter of 2027, remaining well above its one-percentage-point tolerance band for the rest of this year. Headline inflation was 4.4 percent in August, the latest statistics agency data. The Monetary Policy Committee has raised rates by a cumulative 50 basis points between April and October, most recently in September, and the bank expects the real policy rate to stay restrictive before converging to neutral from the second half of 2028.
Policy must guard against the risk that persistent fuel, administered-price and food shocks become embedded in expectations and wages, undermining the target's credibility, the review said. Its analysis showed the risk of generalised inflation with rising wages and prices had increased as the initial oil shock persists and new shocks emerge, and the bank said it would act decisively to stop a temporary rise in inflation from becoming entrenched.
For South African households and businesses, borrowing costs are unlikely to ease soon, and food and fuel remain the biggest budget pressures. Chinese merchants and families in South Africa face the same variables through import costs and the rand's exchange rate, and the central bank's next moves will feed directly into mortgage, vehicle and inventory financing costs.
Published by GSM · USA (original Chinese edition)
Photo: 比勒陀利亚的南非储备银行大楼入口。摄影：Janek Szymanowski，CC BY-SA 3.0，来源：Wikimedia Commons
