30/01/2026
MEDIA STATEMENT
29 JANUARY 2026
SAFTU ON THE SARB MONETARY POLICY COMMITTEE STATEMENT
The South African Federation of Trade Unions (SAFTU) notes the recent Monetary Policy Committee (MPC) statement delivered by the South African Reserve Bank Governor Lesetja Kganyago with deep concern. While the statement projects an image of technical stability and cautious optimism, it simultaneously reveals a persistent monetary policy framework that remains detached from the lived realities of the working class, the unemployed, and the broader structural crises confronting the South African economy.
The MPC’s narrative foregrounds global uncertainty, geopolitical tensions, financial market volatility, and inflation expectations, yet it fails to sufficiently account for the fact that South Africa’s primary crisis is not inflation but mass unemployment, deindustrialisation, and collapsing productive capacity. The fixation on inflation convergence toward a rigid 3% target continues to subordinate employment creation and economic transformation to financial orthodoxy. This approach reflects an entrenched neoliberal bias that privileges price stability and the interests of the financiers, over developmental imperatives, despite overwhelming evidence that South Africa’s economic stagnation is rooted in weak investment, insufficient industrial policy, and inadequate fiscal expansion rather than overheating demand.
The SARB’s assertion that growth is “steadier” because the economy has expanded for several consecutive quarters is deeply misleading when placed in proper context. Growth approaching 2% over the medium term is not a recovery; it is stagnation. In a country with one of the highest unemployment rates in the world, such growth is insufficient to absorb new entrants into the labour market, let alone reverse years of job losses. Celebrating marginal household consumption growth without confronting the collapse of fixed investment and manufacturing output reflects a narrow macroeconomic lens that ignores structural realities. Consumption without production merely deepens import dependence and household indebtedness, rather than building sustainable economic foundations.
Equally troubling is the MPC’s continued reliance on interest rates as the primary instrument of economic management. Maintaining the repurchase rate at 6.75%, and thereby the prime lending rate at 10.25%, under the guise of “moderate restrictiveness”, imposes a disproportionate burden on indebted households and small businesses while offering little relief to productive sectors that require affordable credit. High interest rates suppress domestic investment, increase the cost of public debt servicing, and ultimately constrain the state’s ability to finance social and infrastructure programmes. In this context, monetary policy functions less as a stabilising tool and more as an instrument of economic contraction, reinforcing inequality rather than alleviating it.
For the working class, the consequences of this high-interest-rate regime are not theoretical, they are immediate, material, and devastating. Workers are already overburdened by the ever-rising cost of living, including escalating food prices, electricity tariffs, transport costs, municipal service charges, and housing expenses. At the same time, the cost of debt continues to climb as interest rates remain elevated. Millions of households rely on credit simply to survive from month to month, and each rate hold or increase translates directly into higher repayments on home loans, vehicle finance, personal loans, and credit cards. Instead of relieving inflationary pressure, the current monetary stance is effectively squeezing disposable income, deepening household debt traps, and pushing families closer to financial collapse. This regime punishes workers who have no control over administered prices or global commodity shocks, yet bear the full burden of policy decisions made in boardrooms and financial institutions.
The MPC’s emphasis on inflation expectations and the pursuit of a new 3% target further exposes the ideological underpinnings of current policy. South Africa’s inflation rate, averaging 3.2% for the year and peaking temporarily at 3.6%, does not constitute an economic emergency. Yet the Reserve Bank treats even modest deviations as justification for maintaining tight financial conditions. This rigid adherence to low inflation targets ignores international evidence that developing economies can sustain higher inflation levels when accompanied by rising employment, wage growth, and productive expansion. Instead, the SARB’s dogma entrenches a low-growth, low-investment equilibrium that benefits financial markets while suffocating the real economy and impoverishing indebted households.
The statement’s treatment of electricity prices, food inflation, and administered costs also reveals a fundamental limitation of monetary policy. Interest rate adjustments cannot resolve structural supply-side issues such as energy pricing, logistics inefficiencies, or agricultural disruptions caused by disease outbreaks. Yet the MPC continues to imply that monetary tightening can mitigate these pressures. In reality, these challenges require coordinated fiscal, industrial, and infrastructural interventions, not the blunt instrument of high interest rates that simply transfers the pain onto workers and the poor.
Furthermore, the celebration of declining inflation expectations and “benign financing conditions” for emerging markets overlooks the social cost of such outcomes. Lower borrowing costs for investors do not automatically translate into improved living standards for workers. Without deliberate policies aimed at job creation, wage growth, and public investment, financial stability becomes an abstract achievement disconnected from everyday hardship. The Reserve Bank’s repeated calls for fiscal prudence and public debt reduction echo the austerity logic that has already weakened public services, frozen critical frontline posts, and exacerbated inequality.
SAFTU therefore rejects the implicit premise that “monetary discipline” will deliver economic prosperity. The South African economy requires a developmental macroeconomic framework that places employment, industrialisation, and social investment at its centre. Monetary policy must be aligned with expansionary fiscal policy, strategic state-led investment, and active industrial planning rather than functioning as a gatekeeper for financial orthodoxy. The current stance risks locking the country into a prolonged cycle of low growth, high unemployment, rising household indebtedness, and deepening social distress.
The MPC statement reflects a technocratic confidence that is not matched by material improvements in the lives of the majority. Stabilising inflation at 3% cannot be an end in itself when millions remain unemployed, workers are crushed by the rising cost of living, debt repayments escalate with each interest-rate decision, and public infrastructure continues to deteriorate.
SAFTU reiterates that economic policy must serve the people, not merely financial indicators. A genuine recovery demands bold, coordinated action to rebuild productive capacity, expand decent work, reduce household debt burdens, and restore the state’s ability to invest in its citizens. Without such a shift, the pursuit of price stability will remain an empty victory in a nation still grappling with profound economic injustice.
Issued on behalf of the SAFTU General Secretary Zwelinzima Vavi.
For media inquiries, contact the National Spokesperson at:
Newton Masuku
newtonm@saftu.org.za
0661682157
Media Officer
Asive Dyani
0719019564
