NUMSA is disappointed about interest rate decision

The giant National Union of Metalworkers of South Africa (NUMSA) notes with disappointment the decision by the South African Reserve Bank (SARB) Monetary Policy Committee announced by the newly appointed Governor Ms Gill Marcus, yesterday 17 November 2009.

The MPC decided to keep interest rates unchanged at seven percent. This conservative interest rates policy stance constitutes a wrong premise for Ms Marcus particularly when in its own statement the SARB’s MPC stated that economic growth is expected to remain below potential for some time.

In our view as NUMSA, the African National Congress’s (ANC’s) 52nd National Conference (Polokwane 2007) and Elections Manifesto (2009), as well as the ANC-led Alliance’s Economic Policy Summit (2008) have clearly spelled out what is expected of the monetary and interest rates policies. This Alliance Summit identified a need for “urgent national reflection on the appropriateness of inflation targeting as well as the ranges chosen as policy for South Africa given its developmental challenges”. The ANC’s elections manifesto took this further by stipulating that “Fiscal and monetary policy mandates including management of interest and exchange rates, need to actively promote the creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives”.

As NUMSA we believe that the SARB’s MPC decision to keep interest rates unchanged is misaligned to the above objective. The MPC should have cut interest rates, which would contribute towards relieving the working class and the poor from the ongoing crisis that the capitalists have caused. We remain unshaken that the policy of inflation targeting must be scrapped. We shall continue to engage actively with SARB both in boardrooms and in streets until such time that the working class and the poor are prioritised.

NUMSA shall also continue the campaign to ensure that the SARB’s dependence on capitalists which is being championed under the guise of independence is eradicated. Along with this we reiterate our call for the nationalisation of the SARB.

For background information see: Summary of NUMSA’s critique of South Africa’s monetary and financial policy, 18 June 2009.