The Congress of South African Trade Unions (COSATU) has called on the South African Reserve Bank (SARB) monetary policy committee to decrease interest rates by 100 basis points.
In a statement on Wednesday, 18 March 2020, the Congress of South African Trade Unions called on the South African Reserve Bank’s monetary policy committee to “show bold and decisive leadership by slashing interest rates by 100 basis points.” SARB’s monetary committee is set to meet on Thursday, 19 March 2020, to review the prime lending rate. COSATU noted that the monetary policy of SARB plays a significant role in the South African economic climate and the country’s ability to meet its development goals. “Monetary policy influences the conditions under which the private financial sector can create credit, it determines the growth rate of the money supply and the level of interest rate,” the statement read.
The trade union noted the fundamental role that the interest rate plays in the core areas of economic activity, including aggregate demand, investment, inflation, and the sustainability of the public sector.
“This means that they decide the amount of money that is lent out, to whom, and for what purpose, therefore, holding the power to reshape the economic landscape that affects us all. The reserve bank, therefore, has a responsibility to regulate this creation of the new money supply and this is very critical during this period of economic crisis,” the statement explained.
COSATU proposed a way in which commercial banks could aid the issue at hand by offering a one to three-month loan payment deferment option, especially for working- and middle-class families.