Cosatu slams repo rate reduction
By Mandisi Tyulu
12 December 2008
The Congress of South African Trade Unions says it is deeply disappointed that the Reserve Bank has only reduced the repo rate by 50 basis points. Cosatu says a substantial cut could have countered retrenchments and the economic slump.
Spokesperson Patrick Craven says such a small reduction will have a minimal impact on individuals battling to repay loans and bonds. It will also not help businesses struggling against the combined effects of the ten previous interest rate hikes and the impact of the world economic crisis.
“The Governor is still wedded to his irrational attachment to the policy of rigid inflation-targeting, regardless of the fact that the rate of inflation is now falling, and that the biggest challenge, now more than ever, is economic recession and rising unemployment, yet he has still kept interest rates high,” says Craven.
“It is all the more astonishing that he took this decision at a time when governments around the world, many of them with very right-wing, neoliberal views, are slashing interest rates. In the UK for instance, the base lending rate is now only 2%, compared to South Africa’s 22.5%. “
“It is incredible that a developing country like South Africa, with nearly 40% unemployment, should be sticking to a rigidly cautious monetary policy when traditionally conservative governments of the developed countries are using interest rate cuts to save jobs and prevent a recession”, said Craven