The Brief: South Africa’s Reserve Bank holds rates at its first MPC meeting in 2024

The Event

At South Africa’s first Monetary Policy Committee (MPC) meeting of the year, which convened on January 25, 2024, the MPC unanimously voted to retain rates at the 14-year high of 8.25%.  The chart below shows that the South African Reserve Bank (SARB) paused the interest rate hikes in May 2023 after increasing rates by a cumulative 475 basis points from November 2021 to tackle inflationary pressures in the country. 

The SARB initiated interest rate hikes in November 2021 to stabilise commodity prices, long before the global monetary policy tightening spree in 2022 and 2023. South Africa's (SA) inflation jumped to 5% in October 2021 from 3.1% in December 2020 due to global commodity supply shortages resulting from the COVID-19 pandemic. After the rate hikes between November 2021 and May 2023, inflation cooled to 4.8% in August 2023 but spiked to 5.9% in October 2023. 

Though inflation moderated to 5.5% and