COSATU disappointed by the Reserve Bank’s decision not to change  the repo rate

30 March 2017

The Congress of South African Trade Unions has noted with deep disappointment the decision of the South African Reserve Bank’s Monetary Policy Committee to keep the interest rate unchanged at 7%. This is yet another squandered and missed opportunity by the bank to give some hope to the more than 9 million South Africans, who remain jobless and trapped in poverty.

There seems to be no respite to the Monetary Policy Committee’s rigid conservative policies that have already condemned the majority of South Africans to unremitting destitution

The recent numbers by Statistics South Africa show that the South African economy grew by 0,3% in 2016 compared with 2015.The unadjusted real GDP increased by 0,7% year-on-year in the fourth quarter of 2016. This nominal growth is far from enough to deal with the myriad of our socio-economic challenges facing the country.

High interest rates naturally impose a big debt burden on many businesses that are already struggling to keep afloat. This discourages them from doing anything to save jobs and also does not incentivise them to make new investment that could create new ones. The Reserve Bank has not read the body language of the ANC and its professed commitment to radical economic transformation. It is completely out of step with the national priorities of government, labour and much of the business community.

There is an overwhelming case for a substantial cut in interest rates and COSATU reiterates its condemnation of the Bank’s obsession with inflation-targeting, while unemployment continues to rise. The Bank’s strategy must be focused on economic growth and job creation.

As COSATU has been saying for the past years, South Africa has a national emergency, which requires an urgent national response. While the country needs to save and create jobs, the Reserve Bank is sabotaging all the efforts to achieve those goals by sticking with policies that take us in the opposite direction.

While it is supposedly forbidden for shareholders to influence the Bank’s monetary policy, we do not believe that they are not interfering. We therefore reiterate our call for the Reserve Bank to be nationalised reoriented towards the developmental agenda of the ruling party the ANC.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 30 March 2017