South ‌Africa's central bank kept its policy rate at 6.75% on Thursday, saying caution was needed as higher energy prices linked to the ​U.S.-Israel war against Iran would push up inflation.

Economists polled by Reuters had expected no change in the rate, as the Middle ​East conflict ​has forced central banks around the world to revise their forecasts and reconsider the path for interest rates.

South Africa's inflation was well-contained in the months before the conflict, slowing to the central ⁠bank's 3% target in February. However, it is expected to pick up as the effects of anticipated fuel price hikes and a weaker exchange rate filter through.

The decision by policymakers at the South African Reserve Bank (SARB) was unanimous.

"We warned of elevated risks, and we have been proceeding cautiously in our rate setting," Governor Lesetja Kganyago said, reading ​out the decision. "Now ‌a crisis has ⁠hit, this prudent approach is ⁠proving appropriate."

The central bank said on Thursday that it expects headline inflation to accelerate to around 4% soon, with ​fuel inflation of more than 18% for the second quarter.

Before the U.S. and ‌Israel started the war and then Iran retaliated, economists had been ⁠predicting further policy easing by the SARB this year.

But those bets are now off.

Kganyago said the SARB's projection model showed rates unchanged for a longer period, postponing cuts seen in January. The bank kept its economic growth forecasts for this year and next unchanged at 1.4% and 1.9%, respectively.

ADVERSE WAR SCENARIOS

As a net fuel importer, South Africa is heavily exposed to the spike in global energy prices triggered by the Iran conflict. Its currency, the rand, is highly sensitive to risk and has weakened more than 6% against the dollar since the war broke out.

The central bank said on Thursday that it had considered two adverse scenarios ‌for the Iran war, one where the conflict lasts for another two ⁠months or more and another where it lasts more than a year.

In ​both, inflation is above its 3% target and requires higher interest rates to contain price pressures. In the most adverse scenario, inflation rises above 5%, only returning to target in 2028.

Kganyago said before the war conditions were favourable and it ​looked like inflation ‌would settle around the central bank's 3% target fast. He added: "Now there has ⁠been a negative shock, and it could take ​a bit longer."

(Additional reporting by Lulah Mapiye; Editing by Alexander Winning and Susan Fenton)