EFF: Poor South Africans needed bigger repo rate cut

On Thursday, the South African Reserve Bank’s Monetary Policy Committee reduced the repo rate by 25 basis points. 

 It was the central bank’s first rate cut since 2020 and came in response to lower consumer inflation. 

The central bank’s lending rate to commercial banks now stands at 8%, while the prime lending rate is 11.5%.

In August, consumer inflation dipped to its lowest level since April 2021, slowing to 4.4% from 4.6% in July.

EFF national spokesperson Leigh-Ann Mathys said they expected a repo rate reduction of between 50 to 100 basis points.

“While we welcome the much-needed relief for the working class and consumers, the extreme conservatism demonstrated by the Reserve Bank remains a grave concern. South Africa’s economy is in deep crisis.

“Economic growth has remained sluggish, failing to grow by more than 2% in the past five years since Cyril Ramaphosa took office as president. Critical industries essential for meaningful growth, particularly those that produce goods and create sustainable jobs, continue to decline.

“The consequences of this deep crisis and the ongoing decline in key sectors have led to a sharp increase in unemployment.”

Mathys said SARB is only serving the interests of the rich while ignoring the impact of high interest rates on the poor.

“What is urgently needed is public sector investment in critical infrastructure, funded by the state, through central bank interventions, including cheap loans to the state using assets held in pension funds, particularly the R2.6 trillion in state-guaranteed assets managed by the Public Investment Corporation. 

“Currently, the types of investments we are attracting as a country are largely focused on quick, short-term returns. This has effectively turned the Johannesburg Stock Exchange into a gambling platform where speculative trading is prioritised over meaningful investments.”

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