The Congress of South African Trade Unions welcomes the decision by the South African Reserve Bank's Monetary Committee to cut the repo rate by 25 basis points to 3,5%. Now the private sector, in particular, the banks need to come to the party to rescue workers, consumers, businesses and the economy.
They must slash their exorbitant interest rates, make credit more accessible, especially for productive investments. They must also provide loan payment relief for those who have lost their jobs and wages, including a moratorium on house and car repossessions for the remainder of 2020.
Whilst we acknowledge the fact that the Reserve Bank has cut the repo rate to a four decade low, we believe that a much broader debate that focuses on the role and the mandate of the SA Reserve Bank in navigating this economic crisis is necessary. A fragmented and piecemeal approach to fixing the economy will not work.
We remain adamant that the SA Reserve Bank cannot afford to continue only focusing on price stability, as pursued through inflation targeting but should consider broader economic development imperatives
While we acknowledge that price stability is important, we also need a bank with a broader mandate that includes employment creation. The current strategy has entrenched apartheid economic policy of separate development, income, and asset inequalities. We cannot have a monetary policy that ignores the long-term impact that both colonialism and apartheid have had on our economy.
In addition to targeting employment, the reserve bank should align its policy to industrial development, introduce capital controls and impose quantitative controls on commercial banks to ensure that a quarter of their loans go to priority sectors that drive the growth path and create jobs on a larger scale.