Ahead of the SARB interest rate decision on 23 September, Craig Pheiffer looks at oil, inflation, the rand and what could shape the MPC vote
This week, all eyes will be on the South African Reserve Bank (SARB) interest rate decision.
The Monetary Policy Committee (MPC) meets on 23 September 2026 to decide where the repo rate should go next. It is a decision that matters well beyond financial markets. Interest rates influence household budgets, borrowing costs, business investment and confidence across the economy.
The MPC, however, does not make its decision based on one number. It considers a much broader picture of local and global developments that could influence South Africa’s inflation outlook.
What could influence the SARB interest rate decision
Several factors have shifted since the previous MPC meeting, but one of the most important developments has been the rise in oil prices.
South Africa is part of a global economy, which means movements in commodity prices, geopolitical developments, global growth and inflation can all influence the MPC’s thinking.
Higher oil prices increase transport and production costs. Over time, businesses may pass some of these costs on to consumers.
Central banks can often look through a once-off price shock. The concern becomes greater when those price increases begin filtering more broadly through the economy.
Why inflation expectations matter to the MPC
Inflation expectations will also be closely watched.
The latest Bureau for Economic Research survey left average inflation expectations for 2026 unchanged, with only a modest improvement in expectations for 2027, 2028 and over the next five years.
With South Africa’s inflation target at 3%, expectations remain above the target.
Why does that matter?
Expectations can influence behaviour. Workers may negotiate for higher wages, consumers may bring purchases forward and businesses may increase prices earlier to protect their margins.
When that happens, expectations themselves can contribute to inflation becoming more persistent.
Five things to watch ahead of the MPC meeting
1. Oil and energy prices: Higher oil prices can increase inflation at both consumer and producer level, particularly through fuel, transport and production costs.
2. The rand: A weaker rand makes imported goods and services more expensive and can add to inflationary pressure.
3. Inflation expectations: Persistently elevated expectations can influence wages, spending decisions and how businesses set prices.
4. Economic growth and consumer demand: Stronger demand can create additional price pressure, while weaker consumer activity can have the opposite effect.
5. Food prices and global monetary policy: Weather conditions can affect crop yields and food prices, while decisions by other major central banks can influence global financial conditions and the rand.
Will the SARB raise interest rates on 23 September?
Since the previous MPC meeting, oil prices have risen significantly and inflation risks have increased.
The rand has improved modestly since 23 July, while South African consumers remain under pressure. Inflation expectations also remain above the 3% target further into the forecast period.
The previous MPC meeting ended with a 4:2 vote to keep interest rates unchanged.
Given the change in inflation risks since then, I expect the SARB to increase the repo rate by 25 basis points on 23 September.
The rate decision itself will only tell part of the story.
Just as important will be the MPC statement and the tone adopted by the Reserve Bank. These should provide investors, businesses and consumers with a clearer indication of how the MPC is balancing inflation risks, economic growth and continuing global uncertainty.
Whatever the decision, the message behind it may tell us just as much about where South African interest rates could go next.
Craig Pheiffer