POLOKWANE- A decision by the South African Reserve Bank to keep the repo rate unchanged at 8.25%, is a disregard for the plight of the poor and the working class.
That is according to Limpopo’s South African Federation of Trade Unions (Saftu).
Effective last Friday, governor Lesetja Kganyago said economic conditions had improved and that is the reason for not increasing interest rates, which have increased 10 times since November 2021. Before then, it remained steady for over ten months at 3.5%
Saftu’s Limpopo spokesperson Phala wa Phalakatshela holds the view that the repo rate should be reduced.
“Although the annual consumer price inflation slowed to 5.4%, households are still forced to cut out certain foodstuffs from their daily food staple, as they are unable to keep up with rising costs of living.
“The national bank should reduce the repo rate to alleviate the pressure of debt faced by so many, especially workers,” he said.
According to the union, 65% of people’s income goes towards servicing debt.
Last Thursday, Kganyago announced this decision by the monetary policy committee on interest rates, warning that the average interest rates globally will remain high.
In May, Saftu embarked on a strike against rising interest rates, opposing the use of interest rates as a method of managing inflation, as the country is ravaged by high unemployment rates and poverty.
Inflation is expected to ease between this year and 2025, according to some economists, but Mahlatse Redi, an economist based in Polokwane has warned that it is still too soon to expect a decrease in interest rates.
“There needs to be a state of equilibrium in the international markets for South Africa’s repo rate to be cut, otherwise, as they remain high, we may in the long run face an even greater hike than the current one,” she remarked.
