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SA Reserve Bank still worried about inflation

The central bank announced that it was keeping interest rates on hold after the rand had gained value.

New Finance Minister Pravin Gordhan addressed the media flanked by his deputy Mcebisi Jonas and the Reserve Bank Governor Lesetja Kganyago in Pretoria. Picture: Vumani Mkhize/EWN.

JOHANNESBURG - The South African Reserve Bank says while it's slightly more optimistic that the economy could grow this year, it's still worried that inflation is hovering around the top of its target band.

Yesterday, the bank announced it was keeping interest rates on hold after the rand had gained value and inflation was below the 6% mark.

The bank also revised its economic growth forecast.

After saying the economy would not grow at all this year it now believes it will grow at 0.4%.

Nedbank economist Isaac Matshego says the bank is still watching the ratings agencies and the US Federal Reserve closely.

"Those decisions, of course, could have an impact on the rand and if there's a negative impact on the rand, the inflation outlook could change."

Matshego says the bank is clearly more optimistic.

"The governor did stress that if conditions change, if global conditions change and if domestic sentiments deteriorate we could easily see growth being held further."