Reserve Bank hikes rates again: R1m bond now costs R170 more a month
The second increase this year lands on indebted households as fuel heads for record October prices and growth is projected at just 1,2%.
The Reserve Bank raised interest rates by 25 basis points on Wednesday, its second hike this year, in a move widely expected by economists and one that adds immediately to the cost of household debt.
For a bond of R1 million, the increase works out to roughly R170 more a month. On a R3 million bond it is about R500 more. On a R5 million bond, around R840 more. The figures come from eNCA’s Number of the Day broadcast on 23 September, which noted the increase lands on top of the hike the bank made in May and on top of rising fuel costs.
The bank’s reasoning is straightforward. Oil prices are driving fuel prices up, fuel is driving inflation up, and raising interest rates is the tool it uses to slow the rate at which prices rise. It is, as the broadcast put it, a crude tool, and it works by leaving households with less to spend, which in turn cools demand across the economy.
The timing was unusual. Inflation figures and the bank’s decision normally come on separate days, with the inflation number first. Because Thursday is Heritage Day, both landed on Wednesday. Inflation came in at 4,4% for August, up from 4,3% in July and 5% at a two-year high in June. That is above the bank’s 3% target but slightly better than some economists had feared, and a handful had argued the bank might hold rates steady. It did not.
Instead the bank is looking forward. The Reserve Bank Governor said global shocks are hitting the South African economy and described a difficult time for the global economy and for South Africa. The war that the US president once framed as a three-week matter is now months old, and oil is hovering near $100 a barrel. The governor cited data pointing to a 283 cent per litre rise for 95 unleaded fuel and more than R3 for some grades of diesel, which would take petrol and diesel to record highs in October. Fuel prices change on the first Wednesday of the month, so that adjustment is due early in October.
There is one piece of relief in the picture. Agricultural economists have pointed to an ample grain harvest this year, and food price inflation is relatively contained for now. The concern is what a coming drought and El Niño could do to that.
The growth picture is the sobering part. Annual growth is projected at 1,2% this year, the bank said, against 1,1% last year. That is better than the sub-1% years but well short of the higher gear the government’s structural reforms were hoped to deliver, and short of the job creation that was expected to come with it.
The year began with low inflation, a run of interest rate cuts stretching back more than a year, and an expectation of more to come. It is ending with the opposite. If the war continues and oil stays where it is, further hikes remain possible.
Source: eNCA (YouTube), Number of the Day | 25 | 23 September 2026, https://www.youtube.com/watch?v=jmvLOfaHIGA
