By Lerato Mpembe
The Economic Freedom Fighters (EFF) have responded positively to the recently reported inflation figures for September 2024, highlighting a sustained downward trend in consumer price inflation, which now stands at 3.8%. This marks a notable decrease from the 4.4% seen in August 2024, reflecting the lowest inflation rate since March 2021. Despite this, the EFF insists that South Africa’s high interest rate regime continues to place undue pressure on the working class, and they call for more aggressive cuts to the repo rate to alleviate economic strain.
The South African Reserve Bank (SARB) recently cut the repo rate by 25 basis points, bringing it down to 8%. However, the EFF has expressed dissatisfaction with the modest nature of this reduction, criticizing the SARB for not doing enough to address the country’s economic challenges. According to the EFF, the monetary policy approach remains outdated and too conservative, which has perpetuated economic stagnation, high unemployment, and inequality. The EFF argues that a more unconventional, inclusive strategy is required to stimulate growth and alleviate poverty .
This critique follows broader concerns about the South African economy’s persistent stagnation, which has seen limited growth over the past decade. Despite efforts to stabilize inflation within the SARB’s 3% to 6% target range, growth has been lackluster, with the economy struggling to achieve meaningful progress. The EFF also points out that while inflation has eased, this has not translated into job creation or significant improvements in the living standards of ordinary South Africans .
The EFF’s stance echoes growing concerns across various sectors that the SARB’s monetary policy is overly focused on inflation control at the expense of broader economic recovery. This comes at a time when banks are reportedly benefiting from the high interest rates, with some financial institutions posting record profits, while working-class citizens are burdened with rising debt and declining disposable income. The party reiterated that unless more substantial measures are taken to lower interest rates, economic inequalities will continue to deepen, leaving many South Africans in financial distress .
As South Africa’s inflation continues to stabilize, many are looking to the SARB for stronger action. Economists have indicated that further rate cuts are expected in the coming months, with projections suggesting that the repo rate could fall as low as 7.25% by the end of 2024. This would offer some relief to consumers, particularly those with significant debt obligations. However, the EFF maintains that more decisive action is needed now to prevent further erosion of assets and increase in job losses .
In addition to addressing monetary policy, the EFF has called for broader economic reforms, including increased government intervention to support job creation and reduce the country’s reliance on interest rate adjustments as the primary tool for managing the economy. According to the party, a more balanced approach that considers the social and economic realities facing the majority of South Africans is crucial to achieving sustainable growth and reducing poverty .
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