The SA Reserve Bank's interest rate decision was a prudent measure to keep inflation at bay, the Democratic Alliance said on Tuesday.

It was reacting to an earlier announcement by the SARB that it had decided to leave the key repo rate unchanged at seven percent.

"This decision is informed by long term considerations that have to balance the stability of the rand against the need to address economic growth considerations," said Dion George MP and shadow minister of finance.

He added that most importantly, the SARB had remained independent in its decision.

"This will ensure that no special interest group is favoured to the detriment of the rest of the country," George added.

The recent double digit wage increases across different sectors and the expected electricity tariff hike would both contribute to inflationary pressure in the next few months, despite the general downward trend in Consumer Price inflation, he said.

"Base effects on oil prices in the fourth quarter of the year are also set to dampen any quick slowdown in fuel inflation and might also post figures above ten percent towards the end of the year."

According to George, the SARB needed to take its mandate of inflation targeting seriously.

The relatively hawkish stance was necessary in the current environment, he said.

Sapa

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