Pretoria - Hesitant growth in South Africa's economy is expected to contain inflation, Deputy Reserve Bank Governor Daniel Mminele said on Thursday, suggesting interest rates will remain at a historic low of 5.5 percent for the rest of the year.

“The moderate pace of 'core' inflation shows that despite some evidence of price pressures becoming more broad-based, these are still expected to remain contained by the relatively subdued state of the domestic economy,” told bankers in Pretoria.

The central bank had been expecting inflation to peak at 6.6 percent this year - above a 3-6 percent target band - but has trimmed that projection to 6.5 percent in light of lower-than-expected CPI prints.

Headline inflation stood at six percent in March.

Governor Gill Marcus said on Monday inflation should come back into the bank's 3-6 percent target range by year-end “on a sustainable basis”.

Mminele reiterated that despite volatility in the exchange rate of the rand, the Reserve Bank would not target a specific level for the currency, and would continue to build reserves when conditions were right. - Reuters