The Congress of South African Trade Unions (Cosatu) has welcomed the South African Reserve Bank’s decision to cut the repo rate by 25 basis points.
Matthew Parks, Cosatu parliamentary coordinator, said the move will bring much-needed relief to workers and help boost the struggling economy.
Parks said the latest report from the National Credit Regulator shows that many working and middle-class households are drowning in debt. And the situation worsened over the past three years due to a series of steep interest rate hikes.
Ukraine war, oil prices
“This crisis has been made worse with the 475 basis points hikes since the war in Ukraine started three years ago and international oil prices skyrocketed.
“Repo rate hikes have made life unbearable for millions of poorly paid workers struggling to buy the essential goods of life and provide for their families. While there have been some repo rate cuts since then, they have been too far and few,” said Parks.
He highlighted that high repo rates hurt workers the most. Especially because the South African inflation is largely driven by factors beyond consumers’ control.
These include rising fuel prices linked to global oil markets and Eskom’s reliance on double-digit tariff hikes to make up for financial losses, including from those who do not pay for electricity.
Parks said the 25 basis point cut will ease the debt burden on workers. And it will allow them to spend more and help stimulate economic growth. With the festive season approaching, it brings a crucial time for the retail and hospitality sectors. He said the economy needs this extra boost after what he referred to as a difficult year for South Africa.
Room for more rate cuts
He said there is room for more rate cuts in the new year. With inflation now consistently falling and sitting at 3.6%.
“We urge SARB to further lower the repo rate and thus give breathing space to workers. To the unemployed and to an economy struggling to grow. Cosatu will continue to engage with the leadership of SARB on the need to cushion workers. On stimulating economic growth and creating jobs whilst managing inflation,” said Parks.
