THE South African Reserve Bank’s (SARB)decision to keep interest rates unchanged has been welcome but not without reservations.
Governor Lesetja Kganyago announced on Thursday, 23 November, that the monetary policy committee (MPC) decided to keep the repurchase rate at its current level of 8,25% per year.
“The decision was unanimous,” said Kganyago.
The United Democratic Movement (UDM) deputy president Nqabayomzi Kwankwa said though the decision was good, the reserve bank should be mandated to do more to act in the interest of South Africans and Mzansi’s economy.
“The mandate of the central bank must align better with the work and aims of government. The SARB’s primary objective to “protect the value of the currency” should not be its only focus. It must have a secondary mandate, which is that of socio-economic development," said Kwankwa.
He said the policy was outdated and has become a blunt instrument that only considers inflation as a yardstick.
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“It's the poor and the working class whose livelihoods and asset bases that are being destroyed by the implementation of this policy,” he said.
The Congress of South African Trade Unions (Cosatu) said: “Cosatu welcomes the reserve bank's sober decision not to increase the repo rate.”
Chief economist at PwC Lullu Krugel told Newzroom Afrika that it was widely expected by economists and analysts that the reserve bank would not increase the interest rates.
“Make no mistake, if you look at what came out of the governor’s statement, he was by no means saying that we don’t have inflationary risks, and all is under control. He was definitely warning that there is still an upside, specifically if you look at food and fuel prices in particular. Fuel prices remain a thorn in the flesh of the reserve bank," said Krugel.
