Interest Rate Outlook: What the January 2026 MPC Decision Means for Your Business
With the repo rate at 6.75% and economists divided on the January cut, here's how to position your business.
Current Rate Environment
The South African Reserve Bank cut its key repo rate by 25 basis points to 6.75% in November 2025, bringing the prime lending rate to 10.25%. The Monetary Policy Committee meets again on 29 January 2026, with economists offering divided views on whether another cut is coming.
Arguments for a January Cut
Several factors support the case for an immediate rate reduction:
Rand Strength: The rand has appreciated significantly, moving from R17.25/USD at the November MPC meeting to approximately R16.37/USD—its strongest level since 2022. The currency gained nearly 13% against the US dollar through 2025.
Inflation Cooling: Inflation is forecast to drop to around 3.0% to 3.5% in 2026, aligning with the SARB's new target of 3%. Fuel prices have decreased, and average inflation expectations have drifted below 3.9%.
Dr Eliphas Ndou from Unisa notes that "decreases in fuel prices, a strong exchange rate and the drifting of average inflation expectations below 3.9 percent all indicate subsiding inflationary pressures."
Arguments for Holding Steady
Not all economists agree a cut is coming:
Neil Roets, CEO of Debt Rescue, suggests that "while a further interest rate cut remains possible, the balance of factors suggests it is more likely that the SARB will keep interest rates unchanged."
Global uncertainty and potential volatility could give the MPC reason to pause.
2026 Rate Outlook
Markets widely expect the cutting cycle to continue through 2026:
- 50-100 basis points of additional cuts expected
- Repo rate could fall to 6.50% or lower
- Prime rate potentially reaching 10%—levels last seen in 2022
What This Means for Your Business
For Borrowers
- Review your existing debt facilities
- Consider refinancing options if rates drop
- Lock in favourable terms while the cutting cycle continues
For Cash Management
- Lower rates mean less return on cash holdings
- Review your treasury strategy
- Consider accelerating capital investments
For Planning
- Build rate scenarios into your 2026 budget
- Stress test at current rates and potential 50bp lower
- Factor improved affordability into growth plans
