The South African Federation of Trade Unions (SAFTU) notes the decision of the
Monetary Policy Committee (MPC) to reduce the repo rate by 25 basis points to
6.75%, the first move following the adoption of the new 3% inflation point target
±1% band.
SAFTU is not surprised by the timidity of the cut, but we are deeply alarmed by the
narrow, conservative thinking that continues to dominate macroeconomic policy in
our country. South Africa is in a total crisis: mass unemployment, collapsing
infrastructure, a humanitarian disaster in healthcare, unprecedented hunger, and an
economy is stuck in permanent stagnation. The MPC itself admits that growth is “better
but not yet healthy”, a spectacular understatement for a country with:
- Expanded unemployment: 41.3% (Stats SA Q3 2025)
- Youth unemployment: 58.1%
- Poverty affects over 62% of the population
- One of the highest inequality levels in the world
- Austerity-driven collapse of services, from electricity to water to hospitals
A 25 bps cut, under these conditions, is the equivalent of throwing a cup of water at
a burning house.
1. The 3% Inflation Target: A Gift to the Financial Sector, A Disaster for
Workers
The MPC congratulates itself for “progress” towards anchoring inflation at 3%, but refuses to acknowledge the consequences:
- Lower inflation in a depressed economy comes from weak demand, not good
policy.
- A 3% target in a country with mass joblessness is not neutral; it is a class
project.
This target locks South Africa into a permanent regime of:
- higher real interest rates
- lower wages
- suppressed public spending
- slower job creation
This is precisely why even the MPC admits it cannot hit the target without “output
volatility”, which is economic language for job losses, wage suppression, and
stagnation. The real effect of the 3% target is to transfer power from elected institutions to financial markets and credit ratings agencies. It is a policy that prioritises the comfort
of investors over the survival of workers.
2. A Missed Opportunity in the Face of National Crisis
This was the moment for the MPC to help unblock economic recovery.
Instead of a bold cut that could shift credit costs, stimulate investment, and ease the
devastating financial burden on households, the Bank delivered a symbolic
gesture.
The MPC celebrates a “strong rand” and “lower oil prices” but refuses to translate
these into meaningful relief for:
Households drowning in debt,
Small businesses suffocated by interest charges,
Workers who cannot afford transport or basic goods.
There is no reason South Africa should not be aggressively cutting rates in the
context of:
- falling inflation,
- stagnating investment,
- declining real incomes,
- and a humanitarian crisis in working-class communities.
Countries with broader central bank mandates (beyond inflation):
Unlike the SARB, many central banks around the world, including those of the
United States, Australia, Canada, Brazil, India, China, Japan, South Korea, and
Indonesia has explicit mandates to support employment, economic growth, and
development, not just inflation.
United States – Federal Reserve (employment + growth + stable prices)
Australia – Reserve Bank of Australia (full employment + welfare + price
stability)
Canada – Bank of Canada (growth + employment + inflation)
Brazil – Central Bank of Brazil (employment + financial stability + inflation)
India – Reserve Bank of India (growth + development + inflation + credit to
priority sectors)
China – People’s Bank of China (growth + employment + development +
stability)
Japan – Bank of Japan (economic stability + support for government
economic policy + inflation)
South Korea- Bank of Korea (price stability + economic growth + financial
stability)
Indonesia, – Bank Indonesia (price stability + growth + financial inclusion)
3. Even the IMF Warns That South Africa Is Bleeding Under Austerity
The IMF Article IV Report, hardly a socialist institution, confirms what SAFTU
has been warning for years:
IMF Findings:
South Africa’s economy is stuck in structural stagnation.
Public services are collapsing under austerity.
Inequality is among the worst globally and is a direct drag on growth.
The fiscal cuts have starved infrastructure of maintenance, deepening
electricity, water, and transport failures.
Unemployment at over 40% is not cyclical; it is structural and political.
Without major public investment, South Africa will not break out of stagnation.
When even the IMF raises the alarm about unemployment, inequality, and
underinvestment, it exposes the cruelty of the Treasury and the Reserve Bank’s narrow
inflation-obsessed framework.
4. The MPC Ignores the Real Drivers of Inflation
The Bank admits that recent inflation rises came from:
Fuel
Meat
Vegetables
Administered prices
None of these responds to interest rate increases.
You cannot bring down the price of cabbage or petrol by pushing millions into deeper
debt. Yet the MPC remains committed to treating inflation like a mechanical disease rather than a political economy problem rooted in price gouging, monopolies, corporate concentration, and import dependence.
5. SAFTU’s Position: We Need a New Macro Framework Rooted in Jobs and
Social Reconstruction, South Africa requires a total macroeconomic shift, not a technocratic tinkering with the repo rate.
SAFTU demands:
A. Replace inflation targeting with an Employment and Development Mandate
Like the US Federal Reserve and many Asian central banks, SARB must be legally
mandated to prioritise:
Full employment
Industrial development
Financial stability
And social equity
B. A large-scale public investment plan
Funded by:
Reversing corporate tax cuts
Wealth taxes
Tackling illicit financial flows
Using GEPF/PIC investment for public infrastructure
Ending austerity
C. A programme to rebuild public services
Healthcare, water, electricity, sanitation, public transport, and the systems that
determine whether people live or die.
D. Structural transformation of the economy
To break dependence on raw commodity exports and build manufacturing capacity.
6. A Small Cut Cannot Save a Broken Economic Model
SAFTU is clear:
South Africa is collapsing not because households are spending too much, but
because workers have been robbed of spending power, jobs, and dignity for
over a decade. The 25 bps cut is an acknowledgement that the era of high rates is unsustainable, but it is not a real shift.
The crisis demands:
bold, developmental macroeconomic policy;
public-led investment;
a living wage economy;
and a complete break with austerity.
Workers do not need symbolic gestures.
Workers need jobs, incomes, public services, and an economy that works for
the majority.
SAFTU will continue to fight for a macroeconomic regime that places people
A statement was issued on behalf of the SAFTU General Secretary Zwelinzima Vavi.
For media inquiries, contact the National Spokesperson at:
Newton Masuku
0785164094
Media Officer
Asive Dyani
0719019564
