Lungile Ntimba
THE Economic Freedom Fighters (EFF) have called on the South African Reserve Bank (SARB) and the Monetary Policy Committee to abandon the unemployment-inducing policy of high interest rates that “suffocates the economy”.
The EFF National Spokesperson Leigh-Ann Mathys, said on Wednesday that there was a need for a different monetary policy approach since inflation has dropped.
This call comes after the Stats SA results announced on Wednesday, showed that consumer price inflation dropped down to 4.6% in July from 5.1% in June – the lowest recorded since 2021.
The latest Inflation indicates that it is now closer to the midpoint of the bank’s inflation targeting range.
“We call on the Committee to cut interest rates by 150 basis points at the next meeting, bringing the repo rate down to 6.75%” Mathys said.
The EFF believes that the current monetary policy instrument implemented by the SARB in 2022 when it increased the repo rate from 4.75% to 5.50% was “misguided”.
“The SARB adopted this tool based on outdated orthodox monetary policy, despite the high level of unemployment, inequality, and poverty, which have negatively affected demand,” said Mathys.
Marthys has emphasised that, if the Committee fails to reduce the interest rate, the economy will continue to suffer and it will result in more job losses, erosion of assets and savings, and increased financial burdens on workers who are already struggling with high repayments on bonds, vehicle loans, and other debts.
“The Committee cannot continue to justify maintaining the high levels of interest rate, claiming inflation is stubborn while their projections models are incorrect and continue to miss the mark,” Mathys said.
Marthys also added that the South African economy has not grown by more than 2% in any quarter over the past decade, except during the post-COVID period when restrictions were relaxed, while more people continue to lose their jobs.
“We have seen banks reporting high-record profits due to high interest rates and the resulting high indebtedness and bankruptcy of the working class” Marthys continued.
Marthys said executive bosses are the only individuals who benefitted from the bonuses and transfer of profits through dividends to foreign shareholders, while the economy is not growing, with no new jobs created and no factories built.
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