The Independent Municipal and Allied Trade Union (IMATU) is calling for interest rate cuts ahead of the Monetary Policy Committee’s decision this Thursday.
IMATU has submitted a motivation for the lowering of interest rates to South African Reserve Bank (SARB) Governor, Mr Lesetja Kganyago. IMATU believes that an opportunity exists for the Reserve Bank to simultaneously fulfil its inflation targeting mandate and lower interest rates. Consumer Price Inflation (CPI) is presently recorded at 4.1%, falling below the mid-point of the South African Reserve Bank’s inflation target range of 3% to 6%. Based on the Bank’s own forecasts, headline inflation is expected to remain below 5% this year, with annual CPI calculated at 4.8%.
“While we acknowledge the Monetary Policy Committee’s mandate to manage inflationary increases, we remain concerned about our country’s poor domestic growth forecasts and escalating unemployment figures. Many of our members and South African consumers are cash-strapped, financially burdened and indebted. A decision to decrease interest rates will not risk a breach of the target range, to the contrary, lower interest rates will result in increased disposable income, promoting growth through enhanced household spending capacity,” explained IMATU General Secretary, Johan Koen.
IMATU has urged the Governor to lower interest rates in order to promote growth and simulate consumer spending.
High unemployment, low economic growth and overstretched consumers necessitate the need to provide financial relief where possible. IMATU believes that further interest rate increases coupled with increases in electricity tariffs, fuel, food and transport costs will place unbearable financial pressure on consumers.