The Congress of South African Trade Unions (Cosatu) says the South African Reserve Bank (SARB)’s decision to hike interest rates by 75 basis points will have a devastating impact on both the economy and consumers.
The labour federation believes that the bank should have increased the rates by a smaller margin.
Cosatu’s parliamentary coordinator, Matthew Parks, has described the rate increase as huge blow to the workers.
“It’s a huge blow. It means that workers have less money to take home, to care for their families. It means workers’ home loans repayments, credit cards and their store payments, whatever debt they might have is much more expensive. This is devastating to the economy. We condemn the Reserve Bank for doing this,” says Parks.
The video is the South African Reserve bank announces interest rate decision:
DA urges government to assist heavily indebted consumers
The Democratic Alliance (DA) says government needs to help out as South Africans face further economic hardship amid the reserve bank’s decision to hike rates.
This means that the prime lending rate has increased to 9%.
The DA’s spokesperson on Finance Dion George says government needs to do something to help the already stressed consumers.
“It does however mean that there’s significant hardship for South African consumers, and hardworking South African taxpayers. It would be expected now that government should do something bout VAT [value added tax]. Especially if you look at the fiscal space, people are paying more for transportation, they are paying more for food. It’s becoming very difficult, and what is happening is that people are being taxed into poverty.”
“So, what government can do right now, it can provide a tax relief that’s required. In the first instance, what it can do is stop borrowing so much money, stop the corruption, stop the stealing,” adds George.
Video: Reactions to SARB’s repo rate hike
ANC calls on government to address the energy crisis
The Chairperson of Parliament’s Standing Committee on Finance, Joe Maswanganyi, has called on government to urgently address the energy crisis in the country.
He says it must also deal with maladministration in state-owned entities.
Maswanganyi was responding to the Reserve Bank’s decision to increase interest rates.
He says the increase will have an adverse effect on the already over-burdened consumers.
“Government has to make sure that it grows the economy. Fix the SOEs (state-owned enterprises) in particular Eskom. Deal with the issue of governance and management and attend to the issue of youth unemployment. Without aggressively dealing with the issue of growing the economy, we will continue to see the plight of the working class and the middle class going down,” explains Maswanganyi.
Political party reaction to yet another interest rate hike
A variety of pressures
A poll of economists originally predicted a 50-basis points hike, but the higher-than-expected June headline inflation figure of 7.4% on Wednesday prompted the central bank to hike the rates by 75 basis points.
The bank has now hiked interest rates by a cumulative 125 basis points since November 2021.
Els says that there’s a variety of pressures.
“The consensus was for 50 basis points, but after yesterday’s [Wednesday] inflation numbers, I started thinking that given the more widespread nature of the price increases we have seen in the CPI [Consumer Price Index], that the Reserve bank will actually consider seriously 75 basis points basis points.”
“Because it’s not only food and petrol anymore that’s driving up inflation, we’ve seen some pressures coming through in the consumer goods categories like furniture, appliances, clothing, footwear, and vehicles,” adds Els.
The video below is reaction following the SARB announcement:
-Additional reporting by Lulama Matya