The latest Monetary Policy Review from the South African Reserve Bank highlights a more uncertain economic environment, with inflation risks shifting to the upside despite recent progress in stabilising prices.

Inflation reached 3% in February 2026, aligning with the Bank’s revised target. However, the outlook has become more complex. While inflation is expected to rise in the near term, it is still projected to remain within the target range and return to the 3% objective by late 2027.

A key driver of this shift is global volatility, particularly energy-related shocks linked to geopolitical tensions. Rising prices for oil and other inputs have interrupted the recent trend of declining inflation and increased uncertainty around future price pressures. As a net importer of fuel, South Africa remains especially exposed to these developments.

The Review emphasises that monetary policy must remain cautious in this context. While earlier expectations pointed to potential interest rate cuts, the current environment has narrowed the scope for easing. Instead, policy is likely to remain data-dependent, with a focus on anchoring inflation expectations and maintaining credibility.

Importantly, the Bank outlines a range of scenarios. In its baseline, inflation pressures ease over time as global conditions stabilises. However, more severe scenarios such as prolonged geopolitical disruptions could lead to higher inflation and tighter monetary policy.

Overall, the Review signals a shift from a relatively stable inflation environment to one characterised by heightened external risks. For businesses and households, this implies continued uncertainty around interest rates, input costs, and economic conditions over the medium term.