The Congress of South African Trade Unions (COSATU) hopes the Reserve Bank will cut interest rates and provide the economy much needed relief when the Monetary Policy Committee (MPC) meets on Thursday.

The repo rate has remained steady at 8.25% since May 2023 but now with inflation having eased to 4.4% in August, COSATU believes it is time the Reserve Bank shows confidence in the economy and start cutting interest rates.

The MPC has previously said it would only consider reducing the repo rate if inflation dips below 4.5% in line with its policy of ensuring inflation remains within a 3% to 6% target range. However, with several positive indicators including declining fuel prices, a stronger Rand and improvement in consumer confidence, there is little reason why the Bank should not cut interest rates.

Workers and their families have felt the pain of 475 basis points hikes to the repo rate over the past two years. With inflation now at 4.4%, there is space for a cut tomorrow.  With a struggling economy, staggering levels of poverty and inequality, and three quarters of job losses, there is a dire and desperate need for the Reserve Bank to cut the repo rate now and in November to give relief to millions of workers and stimulate a fragile economy. South Africans and especially workers, need and deserve a break.

The Federation welcomes reports that the implementation of the two-pot retirement system on 1 September has contributed to the improvement in consumer confidence as households experience relief brought on by withdrawals from their savings pot. Workers will use this money to reduce their level of indebtedness. It is for this exact reason that COSATU first proposed the system to Parliament in May of 2020.

The ongoing work at Eskom which has resulted in nearly five months without load shedding is yet another reason to be optimistic. However, government needs to intensify support for the utility to reduce its dependency on double digit electricity tariff hikes, and for load shedding to remain a distant memory.

Further interventions are needed at Transnet Freight Rail and Metro Rail to protect food and commuters from fuel price hikes. Government also needs to accelerate the review of the fuel price regime, reduce related taxes to provide relief to consumers, commuters and the economy.

Issued by COSATU

Matthew Parks(COSATU Parliamentary Coordinator)

Cell: 082 785 0687

Email: matthewcosatu.org.za