South Africa's central bank kept its benchmark repo rate unchanged at 7% yesterday , in line with expectations, saying the near-term outlook for inflation had deteriorated and the domestic growth outlook remained constrained.
Governor of the Reserve Bank Lesetja Kganyago said the near-term inflation outlook had worsened and the growth outlook remained weak.
He reiterated that the monetary policy committee still held the view that it may be near the end of the hiking cycle.
"However, should second-round effects emerge that undermine the longer-term inflation outlook, there may be a reassessment of this view," Kganyago told a news conference after the committee's first meeting of 2017.
"The committee remains concerned that the longer-term inflation trajectory continues to be uncomfortably close to the upper end of the target range," he said.
The rand extended gains slightly against the US dollar to 1.1%, in response to the announcement that the repo rate had been left at 7% - a level it has been at since March last year.
All 27 economists polled by Reuters expected the repo rate to be kept on hold.
Kganyago said inflation was expected to average 6.2% this year, higher than a previous forecast of 5.8%.
The Reserve Bank targets inflation of between 3% to 6%, but a severe drought last year, low economic growth and a weakening currency have kept consumer prices elevated.
It forecast the economy to grow 1.1% in 2017 compared with a projection of 1.2% in November.
The bank projected last year's growth at 0.4%.
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