(Bloomberg) -- South Africa’s central bank left borrowing costs unchanged, delivering the widely expected verdict one day after the nation held pivotal elections.

The monetary policy committee kept its benchmark interest rate at a 15-year high of 8.25% for a sixth consecutive meeting, Governor Lesetja Kganyago said at a press conference north of Johannesburg on Thursday. 

That matched the estimate of all 22 economists in a Bloomberg survey. They anticipated the central bank would maintain its stance to help quell price pressures and keep a low profile in the shadow of what is turning out to be the closest election in 30 years.

“The committee remains concerned that inflation expectations are elevated,” Kganyago said. “Although the MPC assesses the inflation forecast risks to be broadly balanced at present, high inflation expectations require that we deliver on our target sooner rather than later, to re-anchor expectations.”

The hold decision was backed by all six MPC members, he said.

The rand weakened 1.2% to 18.6074 per dollar by 4:42 p.m., little changed from where it was trading before Kganyago announced the monetary policy stance.

The central bank has been adamant about returning inflation to the midpoint of its 3% to 6% target range, where it prefers to anchor expectations. 

The MPC in March took the view that inflation risks were skewed to the upside, but Kganyago rejected the idea that changing that description to say they are now broadly balanced was a dovish shift.

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“We have not taken a view of being tolerant of inflation,” the governor said, noting that the risks might materialize in either direction.

Inflation cooled for a second straight month to 5.2% in April; it’s been above the midpoint for three years. Elevated price pressures prompted officials to start hiking rates in 2021 until they paused the tightening campaign a year ago.

Prior to Thursday’s decision, South African price pressures had been expected to moderate, supported by a strengthening rand. The currency has been buoyed by investor optimism that the next government will still be led by the ruling African National Congress, keeping the country on a market-friendly path even if it has to form a coalition with a smaller rival.

The currency weakened sharply on Thursday after a projection model showed the ANC will lose its parliamentary majority for the first time since it came to power three decades ago. That may lead the party to form a coalition with parties including the leftist Economic Freedom Fighters, a possibility that’s spooked investors.

Kganyago, who was reappointed to a third five-year in March, acknowledged the election could become a factor for monetary policy if it led to changes in fiscal policy. But he assured South Africans that the central bank will stick to its inflation-fighting task.

“The central bank must rein in inflation, and that, you have our commitment: We will rein in inflation,” he said.


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