Reserve Bank Governor Warns of Aggressive Policy Response if Iran Conflict Triggers Persistent Inflation

SARB Governor Lesetja Kganyago warns that persistent inflation from the Iran conflict will trigger a central bank response. Read about the 40% oil surge and 3% target.

By: AXL Media

Published: Apr 23, 2026, 3:39 AM EDT

Source: Information for this report was sourced from Daily Investor

Monetary Policy Vigilance Amid Persian Gulf Instability

The South African Reserve Bank (SARB) is prepared to transition from a neutral to an active stance should the inflationary shocks caused by the conflict in Iran become a permanent fixture of the economy. Speaking at the Soweto Theatre, Governor Lesetja Kganyago emphasized that while the central bank typically treats geopolitical shocks as temporary, the current situation requires a cautious evaluation. The bank's Monetary Policy Committee (MPC) recently maintained the benchmark repo rate at 6.75%, but the tone of the leadership has shifted toward high alert as the duration of the regional war remains an unknown variable.

Historic Fuel Price Hikes and the Inflation Target

The economic fallout from the attacks on Iran has manifested most sharply in South Africa’s energy costs. Following the blockade of the Strait of Hormuz—a transit point for 20% of global oil—gasoline and diesel prices in South Africa saw their steepest increase in nearly two decades on April 1. MPC member David Fowkes characterized this jump in fuel price inflation as the largest in the history of the country's inflation targeting era. This surge occurred just as March data showed inflation edging up to 3.1%, narrowly breaching the SARB’s ambitious new 3.0% target.

Quarterly Projections and the Peak of Price Instability

Internal modeling from the central bank suggests that the most intense inflationary pressure is currently being felt, with projections placing the peak at 4.3% for the current month. This forecast incorporates the immediate shock to the transport and logistics sectors but assumes a level of eventual stabilization. However, the governor noted that the SARB’s response will be dictated by the "persistence" of the shock; if high oil prices begin to anchor themselves in secondary costs like food and manufacturing, a rate hike may be required to protect the purchasing power of the rand.