The South African Reserve Bank has kept the repo rate unchanged at 3.5%, in line with economists' expectations.

During a media briefing on Thursday, Reserve Bank Governor Lesetja Kganyago said that all members of the Monetary Policy Committee were in favour of keeping the repo rate on hold.

According to the central bank, core inflation is revised higher to 3% in 2021, from 2.9% estimated previously. Headline consumer price inflation for 2021 has been revised slightly higher to 4.4%, up from 4.3%.

The bank revised the growth outlook from 4.2% to 5.3%. This is despite the much larger negative effect on output than was previously estimated from the July unrest, explained Kganyago.

"Our revised estimate for third quarter economic growth is -1.2%, compared to the previous -0.5%. Output in the manufacturing sector fell by 8.0% in July alone. Mining was up 4.1%, while land freight transport fell by 5.0% and retail output was down by 11.2%," he noted.

Ahead of the SA Reserve Bank briefing, the Bureau for Economic Research had expected the growth outlook to be raised above 5%.

However, the July unrest is expect to weigh on the economy. "The July events and the pandemic are likely to have lasting effects on investor confidence and job creation, impeding recovery in labour-intensive sectors hardest hit by the lockdowns," Kganyago said.

GDP is expected to grow by 1.7% in 2022 - down from 2.3% estimated previously - and by 1.8% in 2023, down from 2.4% estimated previously.