DA optimistic about interest rate cut, credits GNU reforms for improving economic recovery
19 September 2024
The Democratic Alliance (DA) welcomes the decision by the South African Reserve Bank (SARB) to reduce interest rates, which comes at a critical time for our economy. This interest rate decrease is a positive step towards alleviating the pressure on South African households and businesses and reflects the improving economic conditions in the country.
This announcement comes less than 100 days after the Democratic Alliance joined National Government, through the formation of the Government of National Unity (GNU). Since the inception of the GNU, we have seen a definite increase in confidence in Government, and a sense of hope has been restored in all South Africans. This is evident in the strengthening of the rand, together with lower fuel prices and inflation finally falling below the SARB’s target of 4.5%. These are encouraging signs that South Africa’s economy is improving, and there will hopefully soon be some relief for South Africans who have been taking strain under the burden of an increasing cost of living.
While there are significant global factors at play, we must recognise the positive impact of the GNU’s policy agenda, of which the DA is a key driver. A stronger currency and lower inflation are tangible results of this, paving the way for the SARB to shift focus from controlling inflation to stimulating growth.
Whilst we are hopeful this will be seen as an opportunity to kick-start the economy, we understand that sustained economic growth requires ongoing reform and decisive action to address South Africa’s long standing structural challenges. As inflation continues to stabilize, we believe that further opportunities for growth will emerge. However, it is vital that the GNU remains focused on delivering real and impactful reforms to secure a brighter future for all South Africans.
The DA will do all we can to ensure this opportunity is not squandered. Through our growth and jobs policy agenda, we will continue to work with the “builders” to prioritise economic growth, job creation, and fiscal responsibility, and will attempt to ensure that the populist and radical “breakers” are prevented from trashing our Constitution, and any hope of sustained improvements to the lives and livelihoods of all South Africans.
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GOOD welcomes Reserve Bank interest rate cut – Brett Herron
The GOOD party welcomes the SA Reserve Bank’s (SARB) interest rate cut of 0.25% announced today.
South Africans, who are deeply indebted, have experienced years of increased and high interest rates and this first cut, in about 4 years, will bring some relief to consumers struggling with high debt levels and high interest rates.
The market conditions appear to have been present for the SARB to have made a bolder move today – and to have cut rates by at least 0,5% - bringing greater relief to struggling South Africans.
Nevertheless, the moderate interest rate reduction is welcomed and we remain hopeful that the enabling economic indicators will prevail and that there will be a further reduction in interest rates in November – just in time for the festive season.
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BOSA welcomes Reserve Bank’s decision to lower interest rates by 25-basis points
Build One South Africa (BOSA) welcomes today’s decision by the South African Reserve Bank’s Monetary Policy Committee (MPC) to lower the interest rate by 25 basis points, from 8.25% to 8%.
The first cut in four years is a long overdue and welcomed reprieve. Leaving interest rates unchanged again would have kept tight the financial noose around the necks of South African households. South Africans need assistance in lessening the burden of exorbitant cost of living and high levels of personal and household debt.
On average, citizens are using 65% of their net income to service debt. 76% of South Africans regularly run out of money before the end of the month, and more than half run out halfway through the month. Across all classes, citizens are being pressed from all sides as the economy struggles to grow; unemployment increases; and the cost of borrowing remains high.
To further alleviate some of the financial drain, BOSA calls for three urgent interventions from government.
Scrapping the numerous transport taxes – called fuel levies – which make up a third of the total cost of a litre of petrol. This has a direct impact on lowering citizens' transport costs as well as an indirect impact on lowering the cost of food.
Expanding the list of zero-rated food items that are untaxed. This is a vital intervention for poor households that spend a disproportionate amount of income on food.
Freezing the 36.15% electricity price increase scheduled for this financial year. Again, this is an out-of-touch and unaffordable increase for already squeezed households.
Ultimately, the best remedy to address struggling households is to put more jobs in homes. Just 52.4% of households’ main source of income is salaries and wages. This needs to be increased, and to do so we must put at least a job in every home.
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Solidarity welcomes the relief that interest rate cut brings
Solidarity welcomes the decision by the Reserve Bank’s Monetary Policy Committee to bring much-needed relief to households across the country in the form of an interest rate cut of 25 basis points.
“This interest rate cut is most likely still not enough to get the economy going properly, but everyone who is paying bond or vehicle loan instalments, will experience some relief at least.
“We were hoping for a drop of 50 basis points, but we are confident that the Reserve Bank will announce further decreases at its next meeting. We hope this is the start of a longer cycle of interest rate cuts so that the availability of more disposable income can drive economic growth in South Africa,” Theuns du Buisson, economic researcher at the Solidarity Research Institute (SRI), said.
According to Du Buisson, it would appear that inflation is now indeed under control.
“Hopefully, the country’s financial authorities will now realise that the extremely important goal of controlling inflation is not the only goal. Now, more than ever, economic growth, driven by lower interest rates, is needed to create jobs and to alleviate poverty,” he said.
