The Congress of South African trade Unions (COSATU) welcomes the latest 25 basis points repo rate cut to 7.5%, bringing the prime lending rate to 11%.
A rate cut was widely expected given inflation for December came in at 3%, the low end of the South African Reserve Bank (SARB)'s inflation targeting band of 3% to 6%.
COSATU was disappointed the last time the SARB's Monetary Policy Committee (MPC) met and only reduced the repo rate marginally by 25 basis points, considering at the time inflation was the lowest it had been in more than four years.
The current repo rate cut will provide welcome relief to workers who have had to contend with annual price increases for medical aid, school fees and uniforms, electricity tariff increases, as well as fuel prices, while at the same time salary increases have not kept pace with inflation.
The inflation rate has decreased substantially from its peak of 7.8%. COSATU believes this leaves ample room for the MPC to be bold, bring down the repo by between 100 and 200 basis points this year and kickstart this slumbering economy into gear, creating badly needed jobs.
COSATU will continue engaging the SARB to ensure it extends the rate cutting circle, providing much-needed oxygen to the economy that has been struggling to grow beyond 1%. Once again, the Federation calls on government to abandon its obsession with austerity as it has done nothing but saddle the country with an unemployment rate of 41.9%.
The Federation also calls on government to revive the economy by providing extra support to Eskom, Transnet and Metro Rail as these entities are crucial for the optimal functioning of the economy, and in particular to end Eskom's dependency on unaffordable double-digit tariff hikes. Government also needs to accelerate the review of the fuel price regime, reduce related taxes and zero rate key food items to provide relief to consumers, commuters and the economy.
Issued by COSATU