The Congress of South African Trade Unions has slammed Thursday’s rise in the interest rate, saying it will increase the cost of living and slow job creation.
In a statement released on Friday, the union said: ”Given the likely impact of slower growth and employment creation, Cosatu strongly condemns the decision of the monetary policy committee (MPC) to increase the interest rate.
”The current inflation rate remains well within the target range set by the government and in these circumstances, we do not see any reason for the increase,” the union said.
Cosatu also said the inflation target was being prioritised over national development objectives.
”It seems the Reserve Bank is happy to choke off broader developmental strategies and long term growth as long as it can keep inflation below 5% — even though that is far stricter than the national policy.
”Cosatu has consistently argued that the inflation target must not be prioritised over national developmental objectives. Unemployment is at 40% and monthly expenditure of half of all households is less than the indigency level of R800 a month,” the union said.
”For this reason, the Accelerated and Shared Growth Initiative for South Africa [Asgi-SA] sets a target of halving unemployment and poverty by 2014. We expected the MPC statement to at least evaluate the likely impact of higher interest rates on achieving the Asgi-SA targets, rather than acting as if the inflation target is the sole national goal.”
Cosatu said it was calling on to the government to end the inflation targeting regime.
”If it does not do that, it should ensure that equal weight is given to the targets of halving poverty and unemployment. Moreover, the Reserve Bank should be required to target the entire band, not just the lower limit.” – Sapa