The SA Reserve Bank kept the repurchase rate steady at seven percent per annum, following the conclusion of its monetary policy committee (MPC) meeting on Tuesday.

"The decision of the MPC, however, was not unanimous," SARB governor Gill Marcus said at the press conference following the meeting.

"There were strong voices for a cut, but no one discussed an increase."

Marcus said the longer-term inflation outlook remained "relatively favourable" notwithstanding some base effects likely to adversely affect the inflation outcomes in the short-term.

Domestic consumption expenditure remained under stress, and there were no perceived risks to the inflation outlook from this source.

Domestic economic outlook improved

"Despite the continued contraction of private sector gross fixed capital formation, the domestic economic growth outlook appears to have improved, but is expected to remain below the potential output growth for some time."

There were continued signs the domestic economic recovery was underway following the 0.9 percent annualised GDP growth rate measured in the third quarter of 2009.

"However, the recovery is expected to remain relatively subdued and below the potential growth rate of the economy for some time."

Marcus said the SARB had forecast GDP growth would average two percent in 2010 and three percent in 2011.

"Nonetheless it could take some time until pre-recession levels of output are reached."

Marcus said the more positive outlook was in line with the continued positive trends seen in the SARB's composite leading business cycle indicator, which increased strongly again in November.