Twenty-five basis points interest rate cut draws mixed reactions

While political parties have welcomed the relief that will be brought by the 25 basis points cut in the repo rate, they say more still needs to be done to stabilize inflation and reduce the rising cost of living. This after South African Reserve Bank announced the repo rate cut this week.

Government has already welcomed the reduction of the repo rate. But Parliamentarians seem to differ about certain aspects of the announcement.

“We reject the decision by the Monetary Policy of the South African Reserve Bank to reduce the repo rate by 25 percent base points. While we welcomed the much-needed relief for the working class and the consumers, the extreme conservatism demonstrated by the Reserve Bank remains a great concern. Our economy is in a deep crisis. Economic growth remains sluggish. It has failed to grow more than two percent in the past five years since [Cyril] Ramaphosa took office as the President,” says EFF spokesperson Leigh-Ann Mathys.

But other parties have welcomed the reduction in the repo rate.

“The ACDP welcomes decision to cut the repo rate by 25 basis points to eight percent with the prime lending rate dropping to 11.5 percent. This follows inflation coming in at 4.4 percent well within the Reserve Bank’s target rate to three to five percent with the positive outlook going forward. Whilst this reduction will not be too much, it singles an important point for high interest rates,” says ACDP MP Steve Swart.

Some parties say the drop in the prime lending rate is a bit of relief.

“The IFP welcomes the significant reduction in the repo rate as it has been cut by 25 basis points to eight percent. This means the people of South Africa will finally be able to experience the economic relief. However, we celebrate with caution as we know how unpredictable the global financial market can be. The ultimate good news for us would be to see the stabilization of the inflation as this will mean reduction in food prices for our people,” says IFP MP Nhlanhla Hadebe.

Labour federation COSATU says the central bank made a correct decision.

“COSATU welcomes the 25 basis points cut in the repo rate by the Reserve Bank. This is going to be a welcomed relief to millions of workers and their families at large. Workers have been really paying the price of rising costs of living. Workers have been indebtedly and suffering to pay their debt to take care of their families to provide for the most essentials. Workers have gone through difficult periods even above the lower difficulties with 470% basis by the Reserve Bank for the over past five years making it very painful for workers to pay their debt,” says COSATU’s Matthew Parks.

In a statement, Build One South Africa also welcomed the reduced repo rate.