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SOUTH AFRICA: SARB Delivers 25bp Cut, NERSA Approves Lower Eskom Tariff Hikes

SOUTH AFRICA
EM BulletBulletEmerging Market News
  • The South African Reserve Bank (SARB) trimmed the repo rate by 25bp to 7.50%, but the vote split shifted in the hawkish direction, with two members calling for an on-hold decision. The central bank struck some cautious notes, warning that although "in the near-term, inflation appears well contained", the medium-term outlook "is more uncertain than usual, with material risks from the external environment.". The Committee also revealed that it assessed a risk scenario in which a trade war initiated by the US would push USD/ZAR to ZAR21, domestic inflation would accelerate to +5% Y/Y and the policy rate would peak 50bp higher than in the baseline forecast.
  • The National Energy Regulator of South Africa (NERSA) granted Eskom a 12.7% increase in electricity tariffs effective from April 1, only a third of what the utility had been asking for. The tariffs will increase by a further 5.4% in 2026/27 and by 6.2% in 2027/28, which also undershoots Eskom's requests for 11.8% and 9.1% hikes respectively. The regulator said that it took into consideration a flurry of written responses from a variety of stakeholders raising concerns about energy affordability.
  • South Africa will report its trade balance for December at 12:00GMT/14:00SAST. Consensus sees a surplus of ZAR28.9bn.
  • The National Treasury holds auctions for 1.875% 2033, 5.125% 2043 and 5.125% 2058 linkers.
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  • The South African Reserve Bank (SARB) trimmed the repo rate by 25bp to 7.50%, but the vote split shifted in the hawkish direction, with two members calling for an on-hold decision. The central bank struck some cautious notes, warning that although "in the near-term, inflation appears well contained", the medium-term outlook "is more uncertain than usual, with material risks from the external environment.". The Committee also revealed that it assessed a risk scenario in which a trade war initiated by the US would push USD/ZAR to ZAR21, domestic inflation would accelerate to +5% Y/Y and the policy rate would peak 50bp higher than in the baseline forecast.
  • The National Energy Regulator of South Africa (NERSA) granted Eskom a 12.7% increase in electricity tariffs effective from April 1, only a third of what the utility had been asking for. The tariffs will increase by a further 5.4% in 2026/27 and by 6.2% in 2027/28, which also undershoots Eskom's requests for 11.8% and 9.1% hikes respectively. The regulator said that it took into consideration a flurry of written responses from a variety of stakeholders raising concerns about energy affordability.
  • South Africa will report its trade balance for December at 12:00GMT/14:00SAST. Consensus sees a surplus of ZAR28.9bn.
  • The National Treasury holds auctions for 1.875% 2033, 5.125% 2043 and 5.125% 2058 linkers.