The South African Reserve Bank (SARB) raised the repo rate by 25 basis points to 7.25% from 25 September 2026, which took the prime lending rate to 10.75%.
On an R1-million home loan repaid over 20 years at prime, that adds R168.49 to the monthly instalment before fees, by our calculation, taking it from R9,983.80 to R10,152.29. Governor Lesetja Kganyago said the decision of the Monetary Policy Committee (MPC) was unanimous and that the committee’s “primary role is to protect the value of the currency, by getting inflation back to 3% over time”.
What the MPC decides
The MPC sets one number, which the SARB calls the SARB policy rate. The bank’s 16 February 2026 media release on prime describes it as “commonly known as the repurchase (repo) rate”. The name dates from when the SARB lent money to banks through repurchase agreements. In 2022 it moved to a system that works through a deposit facility instead.
The committee meets six times a year and has up to seven members: the governor, the three deputy governors and senior officials the governor appoints. Its members are Kganyago, deputy governors Rashad Cassim, Fundi Tshazibana and Mampho Modise, David Fowkes, adviser to the governors, and chief economist Konstantin Makrelov. After presentations by staff, the members decide and Kganyago reads their statement at a televised press conference.
The inflation target
The rate is set to hit an inflation target of 3%, with a tolerance band of 1 percentage point either side. The Minister of Finance sets the target in agreement with the governor, and in 2025 it replaced the 3% to 6% range used for 25 years. Consumer inflation, measured by Statistics South Africa, was 4.4% in August 2026.
Source: South African Reserve Bank, SARB policy rate series MMRD002A, rate at the end of each month; October 2026 as at 12 October. Chart: Rand Desk
In September 2026 the MPC said higher fuel prices were the main reason it raised its near-term inflation forecasts. It said inflation would likely be above 5% later in 2026 and early in 2027, and expected it back around 3% towards the end of 2027.
From the repo rate to prime
Since 2001 prime has been fixed at 350 basis points above the policy rate, the SARB said in February 2026, so 7.25% becomes 10.75%. Contracts linked to prime are used widely in retail and commercial lending, the SARB’s consultation paper says. Its data shows prime moving on the same day as the policy rate, on 29 May and 25 September 2026.
The SARB has proposed retiring prime as a reference rate. Banks would instead quote loans as a margin over the policy rate, and the SARB says actual loan pricing would not change. It expects the switch to start only after Jibar, the Johannesburg Interbank Average Rate, is retired.
How a change works through
A higher rate raises the cost of floating-rate debt such as home loans and encourages saving, which weakens demand, according to the SARB. It tends to strengthen the rand, which makes imports cheaper, and it signals that the bank means to bring inflation down. In September 2026 the committee said the rand had helped contain import prices. The SARB says policy changes take roughly 12 to 24 months to work through.
What 25 basis points does to a bond
For an R1-million bond repaid over 240 months at prime, the instalment was R9,983.80 at 10.5% before 25 September 2026. At 10.75% it is R10,152.29, which is R168.49 more a month or R2,021.88 a year. Another 25 basis points, to 11%, would add a further R169.59. A cut of the same size from 10.75% would save R168.49.
The rate since 2021
The SARB’s series shows the rate at 3.5% in October 2021. Ten increases from November 2021 took it to 8.25% by May 2023, where it stayed until September 2024. Six cuts of 25 basis points brought it to 6.75% in November 2025, before increases in May and September 2026.
The MPC announces its next decision on 19 November 2026.
