South Africa's central bank kept its benchmark repo rate unchanged as expected at 6.75% on Thursday, saying it had taken note of an improvement in the near-term inflation outlook.

Governor Lesetja Kganyago said a significant drop in international oil prices and a less depreciated rand exchange rate were key drivers of the improved outlook.

The South African Reserve Bank now projects inflation to average 4.8% this year, down from a previous forecast of 5.5%. Inflation is seen averaging 5.3% in 2020.

The bank targets inflation of between 3% and 6%.

"The overall risks to the inflation outlook are assessed to be moderately on the upside. Against this backdrop, the MPC unanimously decided to keep the repurchase rate unchanged," Kganyago said.

All 27 economists surveyed by Reuters had predicted that the rate would be left unchanged, but said a hike was likely at its third meeting of the year in May.

The rand weakened slightly after the decision to 13.7825 per dollar.