The South African Federation of Trade Unions (Saftu) and Cosatu are not dancing at the monetary policy committee’s (MPC) decision to keep the repo rate unchanged.
It’s “terrible news” for the working class, they said.
Reserve Bank Governor Lesetja Kganyago announced on Thursday that the repurchase rate (repo rate) would remain at 6.5% per annum.
Congress of South African Trade Union spokesperson Sizwe Pamla said the announcement was yet another missed opportunity to take a decision that would drive the economy forward rather than into stagnation.
“A cut in the interest rate would have given financial relief to the millions of people and businesses stuck in debt.
“The high unemployment rate in the country is a result of indebted companies retrenching employees.
“Cutting the interest rate would have uplifted the economy.’’
The spokesperson said the MPC was prolonging the economic stagnation by not following the US’s decision to cut down on the repurchase interest rate.
The US Federal Reserve on Wednesday lowered interest rates for the second time this year. The reasoning behind that was to guard the US economy against trade-related uncertainty and slowing global growth.
Saftu general secretary Zwelinzima Vavi accused the MPC of responding conservatively to the problem of a struggling economy.
Chief director of Econometrix Dr Azar Jammine said: “One would have expected the governor to announce they had decided to cut the repo rate, given the low inflation levels before August and the global markets reduction of rates.”
“However, the government might have been scared to cut the rate as it might affect the fiscus.
“Not cutting the interest rate is a bid to try and keep the economy stable.”
The economist added that economic instability was an issue affecting countries globally, not just a South African one.