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SARB Hikes Repo Rate to 7% After Oil-Driven Inflation Jump

Rising oil costs from the Middle East conflict have raised inflation risks that could force further rate increases.

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Bank of England Governor Andrew Bailey speaks during the Monetary Policy Report Press Conference at the Bank of England in London, Britain, April 30, 2026. Kirsty Wigglesworth/Pool via REUTERS/File Photo
U.S. Federal Reserve Board Vice Chair Michelle Bowman testifies during a Senate Banking, Housing, and Urban Affairs Committee hearing on an update from the Prudential regulators, on Capitol Hill in Washington, D.C., U.S., February 26, 2026. REUTERS/Kylie Cooper
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Overview

  • The Monetary Policy Committee, which met on Thursday, voted 4–2 to raise the repo rate by 25 basis points to 7% with the change effective 29 May.
  • The bank said headline consumer inflation jumped from 3.1% in March to 4.0% in April and pointed to higher global oil and fuel prices as the main driver.
  • SARB raised its 2026 inflation forecast to about 4.4% and modelled scenarios where a prolonged Strait of Hormuz disruption or a strong El Niño could push inflation above 6% and require further hikes.
  • The increase lifts the typical prime lending rate to roughly 10.5%, which will raise monthly loan repayments for mortgage, vehicle and other borrowers and squeeze small businesses' cash flow.
  • Unions and civil-society groups urged fiscal steps such as extended fuel-levy relief instead of rate hikes while economists said the path of policy now depends on oil prices and the conflict's trajectory.