South Africa's Reserve Bank left its repo rate steady at 5.5 percent as expected on Thursday, citing an improving economic outlook and sustained recovery in domestic consumption.
Thursday's decision announced by central bank Governor Gill Marcus could signal the halting of a 650 basis point loosening cycle that began in December 2008.
Twenty-one out of 22 economists polled by Reuters predicted the central bank would hold rates steady, with only one expecting a 50 basis point cut to 5.0 percent.
Growth in Africa's biggest economy remains relatively subdued after a contraction in 2009 but is on a steady recovery, Marcus said.
Data on Wednesday showed South Africa's retail sales growth expanded by a more-than-expected 7.8 percent year-on-year as consumer appetite improved.
But labour unions have long demanded more aggressive interest rate cuts, saying the economy needs further stimulus after the first recession in nearly two decades slashed about a million jobs.
South Africa's relatively high interest rates have also driven the rand currency up about 26 percent against the dollar since the start of 2009, raising concerns about manufacturers' export competitiveness.
Marcus said low interest rates on their own could not ensure sustainably higher long-run trend growth and job creation.