At 1425 GMT the rand traded at 15.1500 against the dollar, 0.3% weaker than Tuesday's close.
South Africa's January inflation fell to 5.7% year on year in January from 5.9% in December, though still near the upper end of the South African Reserve Bank's (SARB's) 3%-6% target range.
"Policymakers will probably keep raising interest rates gradually to provide as much support to the economy as possible, rather than the aggressive tightening cycle that investors appear to be anticipating," Virág Fórizs, Africa economist at Capital Economics, said in a note.
The SARB has raised its main lending rate at its last two meetings in November and January. Some economists predict another hike at its next meeting in March, a decision scheduled the week after the U.S. Federal Reserve is expected to raise rates.
The government's benchmark 2030 bond firmed, with the yield falling 11 basis points to 9.095%.
Stocks firmed after stronger-than-expected retail sales data gave investors confidence that the sector continued to recover in the absence of lockdowns.
South Africa's retail sales grew 3.1% year on year in December after rising by a revised 2.7% in November. The market had expected a 2.7% increase.
"The retail sector continued its upward momentum expanding for the fourth consecutive month in December. This momentum is expected to continue into January as back-to-school and returning to work shopping may lift retail activity," economists at Nedbank said.
Positive sentiment was also helped by strong results and outlook reports from some South African companies as well as strong commodity prices.
The Johannesburg All-Share index closed 0.86% firmer, while the Top-40 index climbed 0.82%.
(Reporting by Alexander Winning, Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by Christina Fincher)
