South Africa's Reserve Bank has raised interest rates by one percentage point to 11.5% to counter the inflationary impact of the rand's steep slide last year.

"The monetary policy committee is of the opinion that a more restrictive monetary policy stance is required," Central Bank governor Tito Mboweni said.

Expectations that inflation will continue to rise along with wages prompted the rise.

The negative impact of higher rates on the country's growth rate would be offset by the "competitive external value of the rand", which lost 34% of its value in 2001, Mr Mboweni said.

Export lead economy

"While the domestic economy is going to show very tepid growth this year, the exporters are on an enormous roll," chief South Africa economist at Merrill Lynch Jos Gerson told the BBC's World Business Report.

"With the global economy recovering and South Africa being more competitive than its rivals for exports, my only concern is are we going to hit capacity constrains," he said.

South Africa's volatile rand weakened further on the news, slipping by seven cents to 11.67 against the dollar.

The central bank announced a surprise one percentage point rate rise in mid-January in what it called a pre-emptive strike on imported price pressures fuelled by the rand's weakness.

Trade unions reacted with fury to the rate rise.

The Congress of South African Trade Unions said it was "angered", adding that the country could not "afford to take any measures that will have a negative impact on growth and development".