Johannesburg — The prime interest rate will remain steady after the SA Reserve Bank opted on Wednesday not to change the repo rate.
The repo rate remains unchanged at five percent, and the prime lending rate at 8.5 percent.
Governor Gill Marcus made the announcement a few hours after Stats SA reported that Consumer Price Inflation had risen to 5.9 percent in February.
Marcus said since the bank's last Monetary Policy Committee meeting the domestic inflation outlook had deteriorated "slightly".
However, the risk posed by the depreciation of the rand had overshadowed favourable developments such as lower electricity price increases and some moderation in food price inflation.
"The exchange rate of the rand continues to pose the main upside risk to the inflation outlook," Marcus said.
Since the beginning of 2013 the rand had depreciated by 8.4 percent against the US dollar, and fluctuated within a range of R8.45 and R9.26.
"Domestic factors contributing to the recent rand depreciation include continued work stoppages in parts of the mining sector, which also have the potential to disrupt electricity supplies, and further widening of the deficit on the current account," she said.
The central bank expected inflation to average at 5.9 percent in 2013 and 5.3 percent in 2014.
On the global front, Marcus said growth in the country's main advanced economy trading partners was less positive.
Marcus said while the mining sector had recorded a 7.3 percent year-on-year growth in January, the industry was expected to remain under pressure given the unsettled labour relations environment.
The MPC was concerned about the possible impact of excessively high wage increases on employment growth.
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