25 March 2021
The Federation of Unions of South Africa (FEDUSA) is deeply disappointed at yet another repo rate hike by the Monetary Policy Committee of the South African Reserve Bank (SARB) after it decided to raise the repo rate by 25 basis points from 4% to 4.25% on Thursday. The Bank cited the ongoing Ukrainian war and higher inflation risk as the reasons for its decision.
It is deeply disconcerting that the Bank has decided to increase the rate for the third consecutive meeting since November last year. Hiking the rate in an environment of runaway petrol and diesel prices and
a high unemployment rate of 46.6% could only trigger more hardships for workers and consumers in general. The situation could also get worse if the Ukrainian war drags on and the economy struggles to recover from the COVID-19 pandemic.
FEDUSA believes that hiking interest rates to rein in inflation is a blunt instrument that fails to factor in the negative effects of a stagnant economy on millions of workers, consumers, and businesses trying to survive the pandemic. This latest move by the Bank has pushed sectors hardest hit by the COVID-19 pandemic such as tourism and hospitality further into the doldrums.
A retention of interest rates would have at least alleviated the brutal pressures on workers’ pockets and many households who are increasingly dependent on expensive loans and credit to make up for lost incomes or falling real wages. It would also have given much-needed relief to small businesses. However, on the flip side, the hike brings some relief for millions of pensioners reliant on the proceeds of their lifelong pension contributions.
The Bank’s apparent commitment to an austerity trajectory justifies FEDUSA’s calls for the government’s intervention on behalf of consumers as threats of higher fuel, food, and electricity will introduce further hardships for consumers in April.
For interviews please contact:
Ms Riefdah Ajam
FEDUSA General Secretary
079 696 2625
Mr Ashley Benjamin
FEDUSA Deputy General Secretary
083 258 4433