While welcoming the South African Reserve Bank’s (SARB) decision to decrease the repo rate by 100 basis points, COSATU called on commercial banks to follow suit and reduce their interest rates.
In a statement on Thursday, 19 March 2020, the Congress of South African Trade Unions (COSATU) welcomed SARB Monetary Policy Committee’s (MPC) decision to decrease the loan interest rate by 100 basis points, cutting it from 6.25 to 5.25 percent. “This would hopefully provide immediate relief to all households and industries, and with a bit of luck jolt the economy,” read the statement. This comes after COSATU had called on the institution to lower its repo rate to aid the country’s frail economy.
The union called for this cut not only to stabilise the country’s shaky economy, but to meet the working-and-middle class families during the coronavirus pandemic, which has forced employees into self-isolation, resulting in them working from home. While this is the case, the union asked for employers to be empathetic during this time and not use this as an opportunity to implement retrenchment plans.
When COSATU called for the 100 basis points cut, it also appealed to commercial banks to decrease interest rates, as well as offer a one to three-month loan payment deferment holiday. Although commercial banks are still to heed the call, COSATU urged SARB to ensure that a significant portion of said loans would go to priority sectors that save and create jobs. The union ended the statement by calling for a further cut in SARB MPC’s next meeting.