Make or break for the South African Reserve Bank

• The South African Reserve Bank's decision to keep interest rates unchanged at 7.0% and 10.5% for the repo and prime rates respectively, may be a make or break moment for the central bank as it aims to hit its new 3% inflation target.
• The decision was made despite inflation reaching 5.0% in June, well above the 3% target, and with a split MPC, with four members calling for a hold and two for a 25 basis point hike.
• The Reserve Bank's credibility is now on the line as it faces scrutiny over its ability to reach the 3% target, with some experts predicting additional interest rate hikes if inflation expectations remain elevated or oil prices remain high.