The South African Federation of Trade Unions (SAFTU) strongly condemns the Monetary Policy Committee (MPC)’s decision to once again leave the policy rate unchanged at 7%. This keeps the prime lending rate at a suffocating 10.5%. The decision is yet another indication that the MPC prioritises inflation targeting in the narrow interests of bankers and speculators over the urgent national priorities of economic growth, job creation, and the relief of working-class suffering.
The Impact on Growth, Jobs, and Workers
The continuation of high interest rates entrenches South Africa’s legacy of low growth and mass unemployment. By raising the cost of borrowing, high rates stifle investment and consumption, reduce business confidence, and crush demand. The result is a throttled economy that cannot create jobs at the scale needed to address our unemployment crisis.
In the name of fighting inflation, the South African Reserve Bank (SARB) has weaponised monetary policy against the working class and middle strata, all in the interests of financiers. This is directly at odds with SAFTU’s demand for a monetary policy that supports re-industrialisation, job creation, and inclusive development rather than the profiteering interests of the banks.
Instead of responding to the deepening jobs bloodbath and retrenchment wave, the SARB has chosen to maintain an interest rate regime that worsens debt burdens for households and suffocates productive sectors of the economy such as construction, mining, and manufacturing. At the same time, workers face ever-rising costs of electricity, food, and water.
The Dangers of Lowering the Inflation Target
In July 2025, the MPC announced its intention to lower the inflation target to just 3%. Contrary to the claims of SARB Governor Lesetja Kganyago and Deputy Finance Minister David Masondo, this will not strengthen the economy. Instead, it will lock South Africa into permanently higher interest rates, further undermining growth and throttling job creation.
This reckless approach will:
- Raise the cost of borrowing across the economy.
- Suppress already weak consumer demand.
- Push households deeper into debt traps.
- Crush small businesses and labour-absorbing sectors.
- Exacerbate poverty and inequality in a society already at breaking point.
The Need for a New Direction
A less restrictive monetary policy is needed urgently to stimulate economic growth and create jobs. South Africa’s economy is already burdened by austerity, collapsing public services, and deindustrialisation. Without a decisive shift, the country faces a deepening spiral of unemployment, poverty, and inequality.
SAFTU insists that monetary policy must be repurposed to support an industrialisation strategy, tied to public investment, that can rebuild productive capacity, expand decent jobs, and protect low-income households from the suffocating burden of debt and rising prices.
SAFTU DEMANDS
- A reduction in interest rates to spur growth and job creation.
The SARB’s tight monetary stance has choked investment and suffocated recovery. Lower rates will bring relief to workers, households, and businesses under crushing debt. - A shift away from rigid inflation targeting towards full employment and development.
The obsession with the 3–6% range has come at the cost of economic collapse. SAFTU calls for a people-centred monetary policy that prioritises jobs, re-industrialisation, and inclusive growth. - An expansionary industrial policy.
The manufacturing sector is in free fall, worsened by austerity and restricted credit. Investment in infrastructure, industrial incentives, and curbs on financial speculation are urgently required. - A national employment strategy tied to monetary and fiscal policy.
SAFTU demands a state-led plan that uses monetary and fiscal tools to directly create jobs, invest in local industry, and reverse the catastrophic rise in unemployment.
SAFTU rejects the MPC’s decision as anti-worker and anti-development. South Africa cannot afford to remain trapped in an economic straitjacket designed to please bankers while the majority face joblessness, hunger, and despair. The Reserve Bank must serve the people, not the financial elite.
The time has come for a new monetary policy regime that puts people before profits, jobs before bankers, and economic justice before inflation-targeting orthodoxy.
A Statement was issued on behalf of SAFTU General Secretary Zwelinzima Vavi.
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Newton Masuku
0661682157
