Business
FNB CEO says South Africa’s economic outlook is quietly improving
FNB CEO shares cautious optimism for South Africa’s economy
There is a familiar heaviness that settles in when the South African Reserve Bank announces interest rates. Many households and businesses had hoped January would bring some immediate relief. That did not happen. The repo rate remains at 6.75%, with the prime lending rate holding at 10.25%.
But according to First National Bank CEO Harry Kellan, this is not bad news. In fact, he believes South Africa’s economic story is quietly improving and that the groundwork is being laid for interest rate cuts in 2026.
Why rates stayed put and why that matters
The Reserve Bank’s Monetary Policy Committee chose caution at its January meeting, even though inflation is hovering close to the new 3% target range. The rand has been relatively strong against the dollar, fuel prices have eased, and economic growth forecasts are looking healthier than they did a year ago.
Two members of the committee even voted for a 25 basis point cut. That detail alone fuelled plenty of debate online, with many South Africans asking why relief keeps feeling just out of reach.
Kellan’s view is that the pause is temporary. With inflation pressures still contained and key cost drivers behaving themselves, he says the likelihood of rate cuts later in the year is strong. For consumers, that could mean breathing room. For businesses, it could restore confidence that has been fragile for years.
A global backdrop that still makes markets twitchy
Any optimism comes with a warning label. Kellan has been clear that global risks remain real and unpredictable. Financial markets are especially sensitive to sudden moves from the current US administration, which has already sparked controversy this year through aggressive foreign policy rhetoric and renewed tariff threats against key trading partners.
These tensions have had knock-on effects worldwide. Gold prices have surged to record highs, the US dollar has weakened, and emerging markets like South Africa remain exposed to shifts in global sentiment. Relations between South Africa and the US are also strained, adding another layer of uncertainty that investors are watching closely.
Positive signs closer to home
While global headlines dominate, FNB’s leadership points out that local developments are quietly working in South Africa’s favour.
Chief Economist Mamello Matikinca-Ngwenya highlights the country’s removal from both the Grey List and the European Union’s high-risk jurisdictions list as a major confidence boost. This change matters more than many realise. It lowers perceived investment risk at a time when demand for South African commodities is picking up.
Prices for metals such as gold, silver, and nickel are rising sharply. For a country with a deep mining history, this strengthens export earnings and improves the national balance sheet. It also opens the door to job creation in mining and related sectors, something South Africa desperately needs.
Why the Reserve Bank is still playing it safe
Despite softer inflation expectations and improving data, the Reserve Bank is not ready to ease policy just yet. Matikinca Ngwenya explains that price rigidities remain stubborn in the economy. Getting inflation expectations firmly aligned with the 3% target requires discipline.
By keeping rates unchanged, the MPC is reinforcing its commitment to long-term price stability. This approach may slow activity in the short term, but it helps prevent inflation from flaring up again, which would be far more damaging down the line.
She also points to the role of the Treasury’s fiscal consolidation efforts and ongoing economic reforms. Combined with pressure on price setters to behave responsibly, these steps should gradually reduce operating costs and investment risk.
What this means for everyday South Africans
The mood on social media has been mixed. Some are frustrated that rate cuts keep being delayed. Others are cautiously hopeful, especially as food and fuel prices show signs of easing.
The bigger takeaway is this. South Africa’s economic recovery is not flashy, but it is becoming more credible. If inflation continues to behave and reforms gain traction, borrowing costs should start to fall faster than many expect.
For now, the message from FNB is one of measured optimism. The road ahead is still bumpy, but the direction of travel is finally starting to feel right.
Follow Joburg ETC on Facebook, Twitter, TikT
For more News in Johannesburg, visit joburgetc.com
Source: Business Tech
Featured Image: MyBroadband
