Stability welcomed as volatility rises and SARB keeps interest rates unchanged, says FNB

Johannesburg - Following the South African Reserve Bank’s (SARB) decision earlier today to leave its benchmark rate unchanged, FNB will maintain its prime lending rate at existing levels.

FNB CEO Harry Kellan says, “We expect consumers to remain under some pressure following the recently announced 2025 National Budget Speech by the finance minister. Household budgets will come under pressure with the increase in VAT and with no relief for personal income taxes, as the tax brackets remained unadjusted for inflation.”

“Against this backdrop, we welcome SARB’s decision to leave rates unchanged as this creates a measure of stability to counteract growing uncertainty in global markets. Further rate reductions, while still expected, have become less clear with growing uncertainty in global markets, and locally due to pressure on the National Treasury to fund government spending requirements. Under these conditions, consumers should manage their finances with caution when considering large expenses,” highlights Kellan.

“We expect that the Reserve Bank will continue to find a balance between managing inflation expectations while supporting the broader South African economy. For consumers, emergency savings and longer-term investments should be top of mind.”

“Sound money management remains critical.  We encourage customers to make use of our FNB nav» platform on our banking app which offers a wide range of tools focused on smart budgeting, saving, and investing consistently,” adds Kellan.

FNB Chief Economist Mamello Matikinca-Ngwenya says, “We had expected the MPC to leave interest rates unchanged, therefore today’s decision is no surprise. The global environment remains precarious with adverse risk sentiment likely to weigh on emerging market assets.”

“That said, local inflation should remain anchored over the medium term and a VAT increase, while adding marginal upward pressure to prices, will likely weigh on consumer confidence and spending growth. This, alongside market expectations that the Fed will resume its cutting cycle at the turn of the year, will support the space for further monetary policy easing by the SARB. Therefore, we should see another 50bps worth of interest rate cuts before the end of this year. At that stage, the impact of monetary policy on the economy will be more neutral.”