Increase in interest rates disastrous - Cosatu

By Celeste Ganga
10 October 2007

The Congress of South African Trade Unions (COSATU) is making an urgent appeal to the Governor of the Reserve Bank and his Monetary Policy Committee, not to impose any further increases in base lending rates, when they meet later this week.

“COSATU is convinced that the policy of raising interest rates has had a disastrous impact on the people of South Africa. It has contributed directly to slowing down the rate of economic growth and thus job creation and poverty alleviation,” says COSATU National Spokesperson, Patrick Craven.

Craven explains that this (increase) is deepening the despair of the individuals and families who cannot escape the misery of unemployment.

“The policy is seriously jeopardising the prospect of achieving the governments’ modest, but necessary ASGI-SA target of halving unemployment by 2014,” says Craven.

Craven adds that at the heart of the problem is the Government's disastrous inflation targeting policy, which is based on the false belief that inflation and excessive consumer spending, rather than unemployment and poverty, are the major problems that we face.