Pretoria - South Africa's central bank unexpectedly cut its main lending rate by 25 basis points to 6.25% on Thursday, providing a stimulus to the flagging economy as it lowered its inflation forecasts significantly.
The rate cut was a unanimous decision and the first drop since July last year.
The majority of analysts polled by Reuters had expected no change in rates because of risks associated with a February budget speech and a scheduled review of the country's last investment-grade credit rating by Moody's in March.
South Africa's public finances are under severe strain after repeated bailouts to ailing state firms like power utility Eskom and a steep run-up in public debt.
The South African Reserve Bank (SARB) painted a grim picture on the outlook for economic growth, lowering its predictions for this year and next to 1.2% and 1.6% respectively.