Reserve Bank keeps interest rates unchanged

South Africa’s Reserve Bank unexpectedly kept its key interest rate unchanged at 7% on Thursday, sending the rand currency weaker as most economists had predicted another rate hike.

The bank’s Monetary Policy Committee (MPC) said in a statement that its policy stance was appropriate for now, following its rate hike at its last meeting in May.

Four members of the MPC supported maintaining the policy rate, while two favoured a 25-basis-point increase.

The majority of economists polled by Reuters had expected a 25-basis-point rate increase after renewed hostilities between Iran and the United States in recent weeks sent global oil prices sharply higher.

The South African Reserve Bank targets inflation of 3% with a tolerance band of 1 percentage point on either side. Annual inflation accelerated to 5.0% in June from 4.5% in May.