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rarand--JOHANNESBURG: South Africa's rand was flat on Wednesday and government bond yields ticked higher with market players expecting the Reserve Bank to keep interest rates at 40-year lows as it balances a struggling economy with rising inflation.

The yield on the 2026 bond, the market benchmark, inched up half a basis point to 7.455 percent while the paper maturing in 2015 added one basis point to 5.45 percent.

The rand was at 9.2550 to the dollar by 0604 GMT, barely moved from Tuesday's close at 9.2545. It softened 0.55 percent against the euro to 11.9081.

The market has priced in the probability that the Reserve Bank will not cut its repo rate despite lacklustre growth, keeping it at 5 percent on signs that inflation is trending higher due to rand weakness.

Governor Gill Marcus will announce the rates decision from 1000 GMT, two hours after Statistics South Africa releases February inflation data.

Economics polled by Reuters expect CPI to have quickened to 5.6 percent year-on-year during the month, edging towards the upper end of the central bank's 3-6 percent target band.

Weak economic fundamentals and the constant threat of more strikes in South Africa's mining sector which accounts for the highest output of platinum in the world, should keep pressure on the rand, said Standard Bank trader Oliver Alwar.

"The underlying trend remains solidly intact and we maintain our short rand strategic positions," he said.

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