The rand was firmer on Thursday afternoon‚ after the Reserve Bank kept interest rates unchanged at its first meeting of 2018.

Despite the rand appreciating 13.1% against the dollar since the last meeting of the monetary policy committee (MPC) in November‚ Reserve Bank governor Lesetja Kganyago warned of possible renewed rand weakness.

“In the near term‚ the rand is expected to remain sensitive to sentiment generated by political developments‚” he said. These included the lingering prospect of a credit-ratings downgrade to subinvestment grade by Moody’s.

A Bloomberg consensus of 19 economists and analysts showed that 13 expected rates to be unchanged‚ while five forecast a cut of 25 basis points‚ with one predicting a 50 basis-points drop.

The rand showed little movement during most of Kganyago’s address‚ having been at R12.2713 to the dollar when he began. It strengthened‚ however‚ towards the end‚ to R12.1910‚ before falling back to R12.2365 by the time he stopped speaking.

At 3.30pm the rand was at R12.2273 to the dollar from R12.2929‚ at R14.9593 to the euro from R14.9714 and at R16.9505 to the pound from R16.9883.

The euro was at $1.2234 from $1.2184.

Kganyago was positive about inflation remaining subdued over the medium to long term.

The average forecast for 2017 is unchanged at 5.3% but has been revised downwards for 2018 and 2019 to 4.9% and 5.4% respectively‚ from 5.2% and 5.5% previously. Inflation is expected to average 5.5% in the final quarter of 2019. The lower turning point of the forecast is still expected in the first quarter of 2018 but has been revised down from 4.7% to 4.4%.

“The inflation forecast has improved despite continued increases in international oil prices‚ with the stronger rand the main driver‚” Kganyago said.

First National Bank chief economist Mamello Matikinca said the decision was in line with expectations. “The Reserve Bank remains concerned about the risks to the inflation outlook.”