Johannesburg – The Congress of South African Trade Unions (Cosatu) on Friday added its voice to growing concerns about rising interest rates, and condemned the Reserve Bank’s decision to increase the repo rate by 25 basis points.
The Reserve Bank’s Monetary Policy Committee on Thursday hiked the repo rate – the rate at which commercial banks borrow funds from the Reserve Bank – from 6.75 percent to 7 percent per annum in a bid to tame rising inflation.
This meant that the prime interest rate was now 10.5 percent.
Cosatu’s spokeswoman, Sizwe Pamla, in a statement on Friday said the union federation was “shocked” by the Reserve Bank’s decision which would harm the workers.
“Cosatu is shocked and totally condemns the decision by the Reserve Bank’s monetary committee to increase the repo rate by 25 percent. This reckless decision will cause untold harm to the beleaguered workers and the poor majority. It will further slow the economy and stifle any chances of employment creation,” Pamla said.
The Reserve Bank revised down its economic growth forecast for this year to 0.8 percent from 0.9 percent before‚ and from 1.6 percent to 1.4 percent for 2017.
Cosatu further said workers were battling to make ends meet and provide for their families and the economy was shedding thousands of jobs in all sectors.
“Cosatu is therefore puzzled as to how will making the cost of borrowing money and ultimately of doing business more expensive help to stimulate the economy. This ill-thought out and irresponsible decision will literally rob the poor workers out of their meagre wages and exacerbate an already worse crisis of unemployment,” Pamla said in the statement.
Cosatu went further, saying the Reserve Bank was supposed to serve the people but had now become a liability and a detached institution, whose actions contributed to continued joblessness and deepening poverty.
“We reiterate our position and call for this privately owned Reserve Bank to be nationalised. Those in charge of it no longer seem to care about the impact their careless actions have on the poor. It is insulting then for the exorbitantly paid SARB monetary committee members to unleash another unwarranted attack on the workers through this callous rare increase.”
Economists on Thursday said forecasts indicated that interest rates were still likely to increase further in the course of the year. African News Agency