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Reserve Bank widely expected to keep interest rates on hold

The bank's Monetary Policy Committee is expected to reveal whether it will raise interest rates, today.

Picture: Supplied.

CAPE TOWN/JOHANNESBURG - The Reserve Bank is widely expected to keep interest rates on hold today, despite the latest inflation figures showing the price of goods has risen above six percent year-on-year.

The Monetary Policy Committee is due to make its announcement this afternoon.

Yesterday consumer price inflation for the month of April came in at 6.2 percent, which is above the inflation target band of between three and six percent.

Standard Bank economist Thandi Sithole says the Central Bank has already raised rates by 75 basis points.

"We think the recent hike is enough to keep inflation anchored towards the target and the bank needs to be more inspective of growth and rising unemployment."

Sithole adds rates could be kept on hold.

"We would expect after 75 basis points that they would be slightly more sensitive towards growth."

LISTEN: How to prepare for rising interest rates.

Citibank South Africa economist Gina Schoeman says this gives the Reserve Bank breathing room.

"Ironically, against what I would call a hawkish inflation outlook, we're actually expecting the Reserve Bank to pause at this meeting."

Nedbank's Busisiwe Radebe says the economy's slow growth makes it a tough decision.

"We expect they'll keep it on hold. We also think it's going to be split 50-50."

The rand's volatility and a strong US dollar are also factors that will impact the bank's decision.