The Congress of South African Trade Unions (COSATU) calls on the South African Reserve Bank's Monetary and Policy Committee (MPC) to cut the repo rate by at least 25 basis points at its meeting on Thursday, 31 July.
A repo rate cut at this point would provide a welcome reprieve for millions of workers who have been struggling to keep pace with the rising cost of living. The Passenger Rail Agency of SA (Prasa) put a spanner in the works when it announced it would be raising ticket prices from 1 August. Electricity prices have increased and those on prepaid now must contend with a surcharge slapped on by their municipalities. In addition, food inflation is multiples higher than the composite rate.
COSATU strongly believes that even though the rate of inflation has ticked up marginally from 2.8% in May to 3% in June, the MPC still has ample room to manoeuvre particularly as inflation still lingers at the bottom of the 3% to 6% target range.
Whilst the first phase of the Two-Pot pension reforms initiated by COSATU has released over R57 billion into the pockets of more than 3.5 million workers to help ease their debt burdens, a survey conducted by DebtBusters revealed that 70% of South Africans are still anxious about their finances. A drop in the interest rate would go a long way in alleviating this anxiety and provide the economy with much needed stimulus.
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South Africa's economy has been languishing at a growth rate of 1% since 2008 and we cannot afford to continue down this depressing path, given the dangerously high unemployment rate of 43.1%. The MPC has the ability to make an impact, COSATU urges it to act for the benefit of all by dropping the repo rate at its meeting on Thursday.
