The Reserve Bank has left interest rates unchanged because it expects no growth in the economy this year.

It had earlier predicted 0.6% growth. The International Monetary Fund's latest projection for South Africa's economic growth this year is 0.1%.Although inflation is running higher than the bank's 3%-6% target range - the consumer price index rose 6.3% in June - the outlook for economic growth has weakened.The bank now expected CPI inflation to average 6.6% this year, lopping a percentage point off the previous estimate, governor Lesetja Kganyago said yesterday.The 2017 forecast was revised to 6% from 6.2%, and that for 2018 to 5.5% from 5.2%.The bank now expects inflation to peak at 7.1% in the fourth quarter of this year, with food inflation hitting 12%.The economy contracted by 1.2% in the first quarter.The bank puts 2017 growth at 1.1%, from a previous 1.3% forecast, and the 2018 outlook is for growth of 1.5%, from 1.7% before.The sluggishness of the economy is one of the main concerns of international ratings agencies, which will review their ratings of South Africa again at the end of the year after giving it a reprieve from being relegated to junk status last month.All 16 of the economists surveyed by Business Day had expected rates to be left unchanged yesterday.A stronger rand - it has strengthened to well below 15/$ - and prospects for stabilising or falling global interest rates supported their expectations.Yesterday's decision left the repo rate unchanged at 7%. The bank has raised rates by 75 basis points since the start of the year, and by 200 basis points since January 2014. The last rate increase was 25 basis points in March, followed by a 50-point hike in January.In its annual report released last month the bank warned that further increases this year probably could not be avoided."As most measures of underlying inflation, and inflation expectations, are already close to the top end of the inflation target range, there is little space to defer a policy response," the bank said in the report.Most economists expect one more interest rate hike of 25 basis points this year.On the inflation outlook, Efficient Group economist Francois Stofberg said food prices would probably "return to trend rates early next year".First National Bank said on Monday that better rains were expected this summer, which would eventually bring relief on food prices. ..