Most of the world's central banks are sitting on their hands right now. South Africa just moved the other direction.
It's the Reserve Bank's first rate hike since 2023, with a clear hint that more could follow.
South Africa's Monetary Policy Committee raised the repo rate by 25 basis points to 7%, effective May 29.
The vote was 4-2 in favor of the hike, with the two dissenters preferring to hold. The committee also discussed a bigger 50 basis point move but opted for the more cautious step while waiting on more data.
Governor Lesetja Kganyago said the MPC saw inflation risks intensifying. He also warned that the overlap of multiple supply shocks could trigger second-round effects, which would call for a stronger policy response.
The forward guidance was the kicker. The MPC's three alternative scenarios all point to more tightening over the next year.
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The trigger? Oil.
South African inflation jumped to 4% in April from 3.1% in March as the Iran war pushed energy and food prices higher. That put inflation a full percentage point above the central bank's 3% target, and accelerating in the wrong direction.
The bank lifted its 2026 inflation forecast to 4.4% from 3.7%. It also trimmed its 2026 growth forecast to 1.2% from 1.4%.
The pattern looks familiar. Other oil and food importers are dealing with the same shock, and many are facing the same pressure to act.
Most of the developed world hasn't moved. The US Fed has held rates at 3.5% to 3.75% all year, with traders now pricing in no cuts in 2026 from major banks like JPMorgan and Goldman.
South Africa's hike joins a small group of emerging markets - including the Philippines and Sri Lanka - that have tightened policy during the Iran war. The fact that the committee weighed a steeper 50 basis point move is the louder signal.
Kganyago said decisions will stay meeting-by-meeting, but the path of least resistance now looks like higher rates.
Inflation is expected to peak early next year before drifting back to the 3% target by 2028.
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