Cosatu 'very angry' over rates

Johannesburg - South African labour federation Cosatu, an ally of the ruling ANC, voiced anger on Thursday over a surprise central bank decision to keep interest rates on hold and said it would cost the country jobs.

Cosatu, which has threatened to strike if Reserve Bank Governor Tito Mboweni does not soften his monetary policy stance, told Reuters the bank's decision to keep the repo rate at 7.5% was "unbelievable".

"The Reserve Bank doesn't care a damn about what happens to the economy, job creation," Cosatu General Secretary Zwelinzima Vavi said in a telephone interview.

"Everybody else in the world has reacted to the current crisis by slashing interest rates to 0% and 1%, South Africa is just bucking the trend, moving to the opposite direction. Very very angry, I must say."

South Africa's central bank surprised markets by keeping its repo rate unchanged on concerns about stubbornly high inflation and signs an economic downturn may be nearing an end.

Cosatu and other unions want South Africa to scrap its policy of inflation targeting and to cut rates more aggressively to spur the economy, which has tipped into its first recession in 17 years, and safeguard jobs.

"It is disappointing, and the Reserve Bank is so conservative it is unbelievable," Vavi said, adding the central bank was responsible for thousands of job losses this year.

"We know that we have very deep, deep differences with them and their approach, we think their approach has been very costly for South Africa's economy."

Solidarity union said in a statement keeping rates on hold "will only prolong the recession already plaguing the country".

- Reuters