Central banks across major economies are maintaining their policy rates in response to heightened geopolitical risks and volatile energy prices, according to recent analyst reports. The South African Reserve Bank (SARB) is expected to keep rates unchanged at its latest monetary policy meeting, despite inflation falling to the new 3% target and real rates remaining restrictive. Commerzbank analyst Volkmar Baur notes that the Iran conflict, higher oil prices, and a weaker South African Rand—down over 6% against the US dollar since the start of the month—are key factors driving caution. While an eventual rate cut later in 2026 is possible if geopolitical risks and energy prices ease, for now, the market is not pricing in any change, and analysts surveyed by Bloomberg agree with this outlook. The rise in oil prices is expected to impact gasoline prices, which have a 3.8% weight in the consumer price index, further supporting the decision to hold rates [1].
In the United States, ABN AMRO’s Senior US Economist Rogier Quaedvlieg reports that the Federal Reserve is also expected to stay on hold, with no rate changes anticipated until December 2026. US growth has slowed sharply outside of AI-related activity, with near-zero job creation and downgraded GDP. Tariff-driven and oil-related price pressures are pushing PCE inflation forecasts higher, with expectations for PCE inflation to peak at 3.6% in the second quarter of 2026. The Fed is expected to remain passive, refraining from easing as previously planned before the conflict began. Chair Powell is unlikely to deviate from this course, and his successor, Kevin Warsh, is expected to maintain consensus on not hiking. Policy normalization is projected to begin with two 25 basis point cuts in March and June 2027 [2].
Similarly, Norges Bank (NB) is anticipated to keep its policy rate unchanged at 4% at the upcoming meeting, reflecting uncertainty stemming from the Middle East and volatile energy prices. Danske Bank expects NB to signal an unchanged rate through year-end, followed by a cautious decline in subsequent years. However, there is upside risk, as the rate path could indicate a probability of a rate hike later in 2026 if inflation remains high or rises, driven by global rate expectations [3].
Across all three central banks, the prevailing theme is caution in the face of geopolitical conflict and energy price volatility. While inflation has fallen in South Africa and growth has slowed in the US, the risk of renewed inflation due to oil prices and global uncertainty is prompting central banks to hold rates steady, with the possibility of future adjustments dependent on the resolution of current risks [1][2][3].
CONCLUSION
Central banks in South Africa, the US, and Norway are holding rates steady amid geopolitical tensions and rising energy prices, with analysts highlighting upside risks to inflation and cautious forward guidance. Market participants should expect continued policy restraint until there is greater clarity on global risks, with potential for rate cuts or hikes later in 2026 depending on how these factors evolve.