With the interest rate expected to stay the same after tomorrow’s announcement, UASA would like to urge the Reserve Bank to lower the repo rate to aid struggling consumers and businesses.
The South African economy is struggling with the highest unemployment rate in the country’s history and one of the lowest periods of economic growth. Personal income taxes increased in real terms, business and consumer confidence are at extremely low levels, more consumers are falling in arrears with debt, pension funds are struggling to yield positive real returns and the country is on the brink of a ratings downgrade.
The Monetary Policy Committee (MPC) of the South African Reserve Bank needs to assist in turning the economy around by reducing the repo rate by at least 50 basis points, as this may give the country a much needed positive economic shock.
Many countries have already reduced their interest rates in order to prevent the world economy from entering an economic recession. There is good reason for the MPC to follow suit, as lower interest rates will stimulate consumption spending and make a number of investment projects viable. In addition, it will lower government debt service repayments, the big thorn in the side of the national budget.
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