South Africa’s interest rate over the last decade

Lesetja Kganyago

South Africa is currently faced with the highest interest rate in a decade, with a high chance of it increasing again this month.

The country is in a hiking cycle that started in November 2021. Since the start of this cycle, the South African Reserve Bank (SARB) has implemented nine consecutive interest rate hikes with a cumulative 425 basis points.

The repo rate is currently 7.75% – the highest since 2009, following the 2008 global financial crisis. 

The rate last hit a peak in 2016, when it stood at 7%. The repo rate gradually decreased until it plateaued from mid-2020 until the current hiking cycle.

In 2020, faced with the Covid-19 pandemic, the SARB significantly reduced the repo rate to make it easier for borrowers to meet their financial obligations.

The Reserve Bank decreased the repo rate from 6.5% in January 2020 to 3.75% in 22 May 2020. 

Following this, the repo rate remained stable at 3.5% from July 2020 to November 2021. 

In November 2021, the SARB said, “Given the expected trajectory for headline inflation and upside risks, the Committee believes a gradual rise in the repo rate will be sufficient to keep inflation expectations well anchored and moderate the future path of interest rates.”

This started the SARB’s implementation of policy normalisation, whereby it has attempted to anchor inflation around the midpoint of its 3% to 6% target band.

However, inflation has remained high and sticky despite the SARB’s efforts over the past few months. 

March’s inflation data showed CPI standing at 7.1% and food inflation at a 14-year high of 14.0%.

Despite this high inflation, South Africa is also experiencing muted growth and could even face a recession soon.

South Africa’s interest rate over the last 10 years


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