Trade unions welcomed SA Reserve Bank Governor Tito Mboweni’s announcement of a repo rate cut of 50 basis points on Thursday.
”The action of the MPC (Monetary Policy Committee) must be welcome and the governor congratulated,” National Union of Mineworkers (NUM) secretary general Gwede Mantashe said in a statement.
”The NUM has, through public pronouncements and marches to the Central Bank, called for the reduction in interest rates as one of the means towards responding to our economic challenges.
”This is a positive move in dealing with the problems facing the export sector, particularly the mining industry in our case,” Mantashe said.
The rate cut would aid economic growth and help retain and create jobs and was just one element in ensuring economic growth and determining the real value of the volatile rand.
”Our monetary policy should move more in the direction of supporting a development-oriented economy,” he said.
Mantashe called on other government departments to work towards this goal.
”Other arms of government have to play their part in supporting this positive action by the governor, such as what the Minister of Trade and Industry alluded to when referring to issues of export and import parity prices.”
The Solidarity union also welcomed Mboweni’s move as a victory for trade unions and those people facing retrenchment in sectors such as mining, agriculture and textiles.
”The interest rate cut is positive news for economic growth in all sectors of the economy, especially sectors feeling the brunt of the strong value of the rand,” Solidarity economist Lullu Krugel said in a statement.
Last week Solidarity said over 20 000 people could become unemployed if planned retrenchments went ahead.
”One of the reasons advanced for the retrenchments is the strong value of the rand,” Krugel said, adding that the rate cut could lead to the devaluation of the currency.
The Congress of SA Trade Unions also welcomed the rate cut, but said more was needed to ”stem the tide of job losses” in the mining and manufacturing sectors — which it said was caused by an over-valued rand.
”The decision to cut the repo rate demonstrates that the government has begun to recognise the distress that high real interest rates and the related overvaluation of the rand has caused our people,” it said in a statement.
It would have preferred a deeper cut ”still, we hope this moderate reduction is a signal that the state is no longer willing to prop up the rand at unrealistic levels”. – Sapa