Cape Town. 100219. South Africa is coming out of its first recession in almost two decades reasonably rapidly, says Reserve Bank Governor Gill Marcus. Marcus also said monetary policy remains directed towards containing inflation. The central bank has cut rates by 500 basis points since December 2008, and left the repo rate flat at 7,0% at its last four meetings. Picture Mxolisi Madela

Johannesburg - South Africa's Reserve Bank will wait until September before raising interest rates to give lacklustre economic growth a boost, despite inflation being above its target, a Reuters poll found on Friday.

Eighteen of the 31 economists polled about next week's policy meeting expect the Reserve Bank to hold rates at 5.5 percent to favour an economy that struggled to grow in the first half.

But with inflation well above the central bank's comfort zone, seven expected a 25 basis point hike and six a 50 point increase.

“I expect the Reserve Bank to remain on hold at the July meeting given that there is a huge amount of uncertainty about the near term growth outlook,” said Matthew Sharratt, economist at BofAML.

“Then when we get to the September meeting I think there will be more clarity about the growth outlook. We are likely to have had an end to the strike in the metal sector - that would provide a more opportune moment for them to hike rates.”

More than 200,000 workers in South Africa's biggest union went on an open-ended strike last week, just one week after the end of a crippling platinum mine strike that led to a first quarter economic contraction of 0.6 percent.

Still, under the same pressure as central banks in other emerging markets, the Reserve Bank hiked rates in January to protect inflation from a weaker currency.

The Reserve Bank tries to keep inflation between 3 and 6 percent and the poll, taken in the last week, showed inflation averaging 6.3 percent this year, 0.1 percentage points higher than predicted last month.

A majority said it would peak at 6.7 percent this year.

Core inflation - which excludes the prices of food, non-alcoholic beverages, petrol and energy - has been more stable, supporting the case for holding rates in July although some economists are worried it might rise in the months to come.

“We think the MPC will view the fact that core inflation is still at 5.5 percent as some temporary comfort but see upside risks going forwards,” said Peter Attard Montalto, an economist at Nomura.

“While we think the SARB has overplayed the risks of a wage-inflation spiral to some degree in the past, we think that fear is still very much present and again enough to tip it over into a hike,” he added.

South Africa's growth is expected to slow to 1.8 percent this year, slower than the 1.9 percent predicted last month that would have matched 2013's growth pace.

The outlook for following two years is 2.7 and 3.2 percent respectively. - Reuters