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Central BanksMedium•27 March 2026•

1 min read

Morgan Stanley Forecasts South Africa Rate Hike as Iran Conflict Stokes Inflation

Key Facts

1Morgan Stanley predicts the South African Reserve Bank will raise interest rates in May.

2The South African Reserve Bank recently kept interest rates steady at 6.75%.

3Inflation concerns are rising due to the ongoing conflict in Iran and its impact on economic outlooks.

Morgan Stanley has projected that the South African Reserve Bank (SARB) will implement an interest rate hike in May. This forecast follows a period of monetary stability where the central bank recently maintained its benchmark rate at 6.75%. Analysts highlight that mounting inflationary pressures, triggered by the ongoing conflict involving Iran, have significantly altered the economic outlook. This geopolitical instability is expected to force a shift toward a more hawkish monetary policy stance to curb rising prices. While higher interest rates typically bolster the Rand (ZAR) through improved yields, the underlying cause of the hike poses risks to broader economic growth and equity markets. Investors are now closely monitoring central bank communications for further confirmation of this potential policy pivot.

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