The South African Federation of Trade Unions (SAFTU) outright rejects and condemns the Monetary Policy Committee’s (MPC) decision to leave interest rates unchanged. This decision, while expected from an institution that serves the interests of finance capital, is an act of economic sabotage against workers, the poor, and the unemployed.
In the name of fighting inflation, the SARB continues to weaponize monetary policy against the working class in the interest of bankers,. It continues ignore SAFTU’s call that monetary policy must be used to drive the re-industrialization of the economy instead of the profiteering interests of the financiers.
The South African Reserve Bank (SARB) and its MPC boast about keeping inflation within their self-imposed target, yet they completely ignore the broader economic devastation unfolding before our eyes. Their obsession with inflation targeting—a policy imposed by neoliberal orthodoxy—has no place in a country still reeling from the deep developmental backlogs of apartheid colonialism. South Africa is not a developed European economy; it is a nation with massive inequalities, mass unemployment, a stagnant economy, and collapsing public infrastructure.
High interest rates administered by the SARB robs working class households of disposable income, which is then redistributed to the bankers. It is therefore ironic that in his statement governor Kganyago attributes low growth to amongst other things suppressed demand. High interest rates necessarily lead to suppressed consumer demand as household incomes that would otherwise be spent in the economy are now allocated to debt servicing costs. This then registers as high profit rates recorded by the banking sector, as has been the case since late 2022, when the SARB started ramping up interest rates under what it called policy normalization following Covid-19 lockdown.
Instead of taking decisive action to alleviate the economic suffering of workers and the middle class, the SARB has chosen to maintain suffocatingly high interest rates that only serve the banks and financial speculators while crushing productive economic activity. The economy is in a state of collapse:
- Workers and middle-class families are drowning in debt, with increasing repossessions of homes and vehicles as they struggle to meet loan repayments.
- The public and private sectors are not investing, leaving industrial capacity idle and preventing economic recovery.
- Food prices, electricity costs, and general living expenses are skyrocketing, yet wages remain stagnant, and unemployment is at historic highs.
- Public services are deteriorating due to austerity, while corporations hoard profits and banks exploit the crisis to make record earnings through high interest rates.
SAFTU REJECTS INFLATION TARGETING AS A TOOL OF ECONOMIC WARFARE
SAFTU has long opposed the SARB’s narrow and destructive focus on inflation targeting, which has proven to be an anti-worker, anti-poor policy that protects the wealthy at the expense of the majority. Instead of ensuring economic growth and industrial development, the Reserve Bank has acted as an agent of neoliberal economic colonialism, sacrificing South Africa’s economic future at the altar of profit-driven financial markets.
The SARB’s policy framework is completely detached from the realities of a country that suffered centuries of colonial dispossession and decades of racial capitalism. South Africa requires an expansionary economic policy, not interest rate strangulation, to address the deep structural inequalities and the lack of investment in critical industries.
SAFTU DEMANDS IMMEDIATE ACTION TO STOP ECONOMIC SUFFOCATION
SAFTU demands an urgent change in economic policy direction to rescue workers and the unemployed from the economic crisis imposed by neoliberal institutions like the SARB. We demand:
- The immediate reduction of interest rates to make credit more affordable for working-class households and businesses.
- An end to inflation targeting as the central policy of the SARB, replacing it with a development-focused monetary policy that prioritises employment, industrial growth, and social justice.
- A halt to electricity price increases, which are driving up the cost of living and destroying small businesses.
- Urgent state intervention in the economy, including large-scale public investment in industries that can create jobs and drive economic transformation.
- Debt relief for struggling workers and middle-class households facing home and vehicle repossessions.
SAFTU will not stand by while the Reserve Bank and the government crush the working class with failed neoliberal policies. We will mobilise workers, the unemployed, and progressive forces to fight against austerity, economic strangulation, and the corporate capture of economic policy.
The time for economic transformation is now! Down with inflation targeting! Down with anti-worker monetary policies! Forward to a workers’ economy that prioritises people over profits!
A Statement was issued on behalf of SAFTU by General Secretary Zwelinzima Vavi.
For more details, contact the National Spokesperson at:
Newton Masuku
066 168 2157
Newtonm@saftu.org.za
