The SARB has since December 2008 reduced the repo rate by a cumulative 550 basis points to a three-decade low, the last 50 basis point reduction in March taking the market by surprise.

This week's decision was largely expected after Reserve Bank Governor Gill Marcus in April signaled a no-change decision when she said there was limited scope for further monetary easing and that rates would be stable for "some time."

She said Thursday's decision was unanimous and the committee did not discuss cutting rates.

Twenty-two of 25 economists polled by Reuters last week expected the repo rate to be left steady.

"Our sense remains that policy rates in South Africa have reached the bottom, but that a rate increase would only be well in 2011," said Jeff Gable, head of research at Absa Capital.

Inflation is largely under control with the targeted headline consumer gauge slowing to a near four-year low of 5.1 percent in March, while the economy is recovering, albeit gradually.

The bank said the inflation outlook had improved and the rand currency remained a positive factor although there were risks mainly from administered prices.

High wage settlements not matched by productivity increases could also pose a risk to the outlook, Marcus said.

Unions have continued to demand above-inflation wage increases. Rail and port operations ground to a halt this week as thousands of workers at state-owned logistics firm Transnet went on strike demanding a 15 percent wage rise.

The rates decision is likely to anger unions that have repeatedly called for deeper rate cuts to help spur growth.

Three union federations this week called for government's direct intervention in monetary policy including measures to weaken the rand currency.

"They have missed the boat. They should have looked to what is happening to unemployment because even the growth rate that (Marcus) is projecting is not sufficient to create jobs," said Chris Malekane, labor federation COSATU's economist.

"(Marcus) was supposed to have lowered the interest rate to boost the confidence to create jobs," he told national broadcaster SABC.

The bank's mandate has been expanded to take economic growth and job creation more into account. Marcus has said monetary policy's impact on output is limited.

Marcus said the growth outlook was underpinned by the manufacturing sector. Output rose by a higher-than-expected 6.1 percent year-on-year in March, pointing to another positive GDP figure in the first quarter after a 3.2 percent increase in the last quarter of 2009.

However, consumer demand remains weak as consumers face high debt levels and with about a million jobs lost since the beginning of last year.

"Domestic bank credit extension to the private sector continues to reflect weak demand conditions despite evidence of some loosening of credit supply constraints," she said.

The central bank said although there was some evidence of an improvement in household consumption, higher unemployment would constrain expenditure.