EFF slams ‘senseless and cruel’ rate hike

The EFF has slammed the SA Reserve Bank Monetary Policy Committee’s (MPC) decision to increase the repo rate by 75 basis points, calling it “senseless, cruel and irrational”.

On Thursday the Reserve Bank raised interest rates for a sixth consecutive time to protect the weakened rand and stabilise inflation expectations.

The repo rate was increased to 6.25%, in line with predictions by analysts. It follows July’s 75 basis points hike, the two largest successive rate increases in two decades.

It was tough news for already cash-strapped consumers, and the EFF predicted it would bring “more misery for many working-class households that are highly indebted. They will lose their homes and cars, and are struggling to afford food and other essentials”.

“We are not shocked that despite the worsening cost of living, when many households cannot afford to buy food, cannot afford transport, electricity or housing, there is no practical and believable plan to intervene by the government through monetary and fiscal policies.

“The National Treasury and Reserve Bank have made it clear they will only serve the interests of the financial and mining sectors at the expense of the workers, whose real income is decreasing with each year.

“Many working-class households that are highly indebted are already losing their belongings and, most painfully, their homes.”

The party called on trade unions to reject the “neoliberal redundant obsession of the National Treasury and the Reserve Bank and organise in all spaces to concretise and mobilise society”.

While some agreed with the party, others said they lacked knowledge on the subject.

FNB chief economist Mamello Matikinca-Ngwenya told Business Times FNB expects the Reserve Bank to increase the repo rate by another 50 basis point at the November MPC meeting, pushing it to 6.75%.

“The continuation of aggressive rate increases is partly underpinned by aggressively tightening global financial conditions, the weaker domestic currency and domestic wage pressures as workers demand higher wages to compensate for the higher cost of living,” Matikinca-Ngwenya said.

She said the rate might fall in early 2024, but Investec chief economist Annabel Bishop said it could continue rising into next year.

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