The decision to increase interest rates by the Reserve Bank is reckless
The Congress of South African Trade Unions condemns the reckless decision by South African Reserve Bank’s Monetary Policy Committee to increase the interest rates by 0,25 % given the weak economy and low inflation.
This will hurt the workers by reducing whatever little money they have. The workers in this country are already struggling with the escalating prices of energy, food, transport, education and healthcare. This will result in more home repossessions and also defeats the aims and goals of the recently introduced maximum interest’s rate for all types of credit agreements.
The Reserve Bank has increased the interest rate out of fear that the inflation might increase and because of the Rand's depreciation. Inflation is steady and at 4.7% well below the 6% target limit. The Rand has depreciated because the US economy is growing and its unemployment rate is falling.
By this decision the Reserve Bank has thus decided to punish working and middle class South Africans, who are already battling to make ends meet.
This calamitous decision will only serve to increase the worker’s heavy debt levels, reduce expenditure and consumption further stifling economic growth and job creation. Given that the inflation levels have steadily remained below 6%, this was a missed opportunity by the SARB to in fact reduce the prime rate to provide relief to workers and stimulate the economy.They were supposed to cut interests at this stage with a weak, fragile economy hovering below 2% growth rates and one which has been shedding jobs across sectors. This makes a mockery of the government’s commitment to job creation.