SACP lambasts South African Reserve Bank on repo rate hike

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The South African Communist Party (SACP) blasted the South African Reserve Bank (SARB) for hiking the repo rate by 75 basis points.

The SACP’s newly elected General-Secretary Solly Mapaila spared no punches on the recent repo rate hike. He lamented the Reserve Bank, saying its response to “runaway” inflation was blunt.

“How do you think the majority of the poor in this country are going to be helped by hiking lending rate when they have nothing to spend, in fact you are deepening their crisis.”

A week ago, the Monetary Policy Committee of the Reserve Bank took a decision to hike interest rate by 75 basis points making it the largest interest rate hike in almost two decades.

The last time the Reserve Bank hiked repo rate by 75 basis points was in September 2002. Since November 2021, SARB  has increased the repo rate by a combined 200 basis points to date, 25 in November 2021; 25 in January 2022; 25 in March 2022; 50 in May 2022 and 75 in July 2022.

The central bank has been clear that this hike is meant to preserve the buying power of money as it is affected by inflation that has surged to a 13 year high as it reached 7.4% in June according to Statistics South Africa. This exceeded the maximum line of 6% for the central bank’s inflation targeting.

Mapaila has called on the South African Reserve Bank’s mandate to be expanded to deal with unemployment as a major crisis facing the country and economic development.

Furthermore, Mapaila also said the current liberal macro-economic framework is not suitable for the country and called for radical change to the framework.

He adds that the current framework favours big capital at the expense of the people.

Mapaila lamented the fiscal and monetary policies which he said are not working class friendly.