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Unchanged rates no help: Fedusa

Johannesburg - The SA Reserve Bank's decision on Thursday to leave the repo rate unchanged will not help consumers, the Federation of Unions of SA (Fedusa) said.

"There will be no relief for our members or the common shopper this month - electricity rates and petrol prices will increase and consumers have no recourse," said Krister Janse van Rensburg, Fedusa deputy general secretary.

The union was "highly disappointed" with the decision to keep the repo rate at 5.5%.

Fedusa called for structural changes to South Africa's macroeconomic outlook.

"We are still using outdated and narrow methods to create economic stability," said Janse van Rensburg.

"The South African Reserve Bank's mandate must be extended from only targeting inflation to addressing South Africa's real unemployment figures."

Fedusa affiliate, Uasa, had commissioned a study to explore ways to find the optimal interest rate to address both unemployment and price stability.

This showed "alternative ways of realising an optimal repo rate which address both the unemployment situation and price stability", Janse van Rensburg said.

The research, released on Tuesday, found that South Africa's inflation target of between 3% and 6% was "based on limited macroeconomic analysis... more disturbingly, the report identifies that more than 50% of the current basket of goods and services making up the consumer price index (CPI) is in fact immune to any inflation-targeting measures".

Fedusa welcomed the Reserve Bank's acknowledgement that South Africa needed to focus on fostering an economy reflective of low inflation and job creation, and the country was under-utilising capacity.

"The age-old answer of cutting jobs to maintain profits is simply not an option," said Janse van Rensburg.
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