by AKANI CHAUKE
JOHANNESBURG, (CAJ News) – FIRST National Bank (FNB) has warned of mounting pressure on South African consumers and businesses following the South African Reserve Bank’s decision to raise interest rates amid growing global economic uncertainty.
The South African Reserve Bank Monetary Policy Committee (MPC) on Wednesday increased the repo rate by 0,25 percentage points to 10,50 percent, prompting FNB to adjust its prime lending rate accordingly with effect from Friday.
FNB Chief Executive Officer, Lytania Johnson, said the latest rate increase reflected the impact of global pressures beyond the control of the Reserve Bank, including surging oil prices and geopolitical instability.
“While the increase is a measured response to rising inflationary pressures, it comes at a challenging time for the domestic economy, which continues to require stronger growth and job creation,” Johnson said.
According to the bank, oil prices have risen by more than 55 percent over the past six months, climbing from around US$60 to above US$100 in recent months.
Johnson noted that inflationary pressures began intensifying earlier this year and were expected to remain elevated throughout the rest of 2026 and into 2027.
She said uncertainty surrounding the ongoing conflict in the Persian Gulf continued to pose risks to global energy markets and inflation forecasts.
“A near-term solution could result in lower oil prices and a subsequent reassessment of current inflation forecasts,” Johnson explained.
FNB Chief Economist, Mamello Matikinca-Ngwenya, said expectations that interest rate cuts were unlikely this year would add to financial strain faced by households and companies.
She noted that consumer confidence had shown signs of recovery in late 2025 and the first quarter of 2026, although from relatively low levels.
Matikinca-Ngwenya said focus had now shifted towards possible second-round inflation effects following the spike in energy costs reflected in April’s inflation figures.
“These second-round effects are expected to develop as input cost pressures drive suppliers to increase consumer prices, initially impacting industries most sensitive to energy prices before filtering through the broader economy,” she said.
According to the economist, the Reserve Bank’s latest move aimed to contain the risk of broader inflation by dampening demand and pricing pressures.
She added that the upcoming second-quarter inflation expectations survey, due before the July MPC meeting, could influence the central bank’s future policy decisions.
“Should expectations reflect the risk of a prolonged shift away from the 3 percent inflation target, the SARB may have to raise rates more aggressively to protect the credibility of a lower inflation regime,” Matikinca-Ngwenya warned.
The economist said tighter financial conditions and weakening sentiment were likely to weigh on economic growth as the year progressed.
Johnson urged consumers to remain cautious when considering large debt-funded purchases, warning that additional rate hikes in 2026 remained possible.
She encouraged customers to make use of FNB’s digital financial management tools, including the FNB nav» platform, which offers budgeting and property valuation services.
FNB said it would continue supporting customers experiencing financial difficulties through repayment solutions and debt relief options.
The bank advised affected customers to contact FNB through digital platforms or branches to discuss available assistance.
– CAJ News