Reserve Banks Decision To Cut Interest Rates Welcomed
Some political parties in Parliament and Cosatu have welcomed the Reserve Banks decision to cut interest rates by 25 basis points.
However, some say despite the reduction, interest rates are still higher than before the COVID-19 pandemic. They say theres room for more cuts to stimulate economic growth and to ease the pressure on households.
"While this will bring some relief to hardpressed households and businesses, we believe that there is efficient room for further rate cuts given that the inflation rate is at the bottom of the target of 3 to 6. This is despite the governor referring to material risk globally and even the possibility of trade wars involving the US. We believe that this and further rate cuts will stimulate much needed economic growth and create jobs as long as inflation is kept under control," says Steve Swart, ACDP MP.
Interest rate cut by 25 basis points: Simphiwe Letlojane weighs in "It is important that now that we have low interest rates, that we avail capital for businesses to be able to start. So that people can be able to create work. We avail cheaper capital to make sure that we can fund infrastructure so that our economy can grow and ultimately to use this opportunity to be able to export goods," says Mmusi Maimane, BOSA leader.
"Weve got the Government of National Unity GNU to thank for this. The reason being we know the exchange rate responds strongly to the GNU, we saw that at the formation of the GNU, we saw that over the past weekend when there was tension within the GNU and we saw that again when our leaders started talking this week that the rand strengthened again. What happens then is that if the rand is strong the price of petrol is lower, which we know impacts on the price of food, otherwise known as inflation. What I'm really saying here is that as long as the GNU remains intact we will have conversations about reducing inflation and as a result reducing the rate announced by the MPC," says Dr Mark Burke, DA MP.