COSATU reiterates that this policy will have a disastrous impact on the people of South Africa. It will further slow down the rate of economic growth and lead to even fewer new jobs being created. Every time interest rates go up it raises the cost of borrowing capital for new businesses, which cuts the already low levels of new investment and makes it harder for people to create jobs.

The Reserve Bank’s narrow focus on inflation targeting is not an appropriate monetary policy for an economy that requires significant state intervention to achieve the 6% growth we need if we are to achieve the government’s modest but necessary ASGI-SA target of halving the 2004 levels of unemployment and poverty by 2014. On the basis of present policies we have no hope of meeting that goal.

As COSATU said in its statement, "at the heart of the problem is the Government’s disastrous inflation targeting policy, which is based on the false belief that inflation and excessive consumer spending, rather than unemployment and poverty, are the major problems we face. Not only have these policies failed to stop food prices rocketing; they have caused other costs to rise and thus actually increased the levels of inflation, while at the same time stifling new investment, slowing down growth and sabotaging government policy to cut unemployment and poverty."

We call on government and the Reserve Bank to urgently review its disastrous monetary policy and recognise that our primary economic challenges are to increase growth and cut unemployment and poverty!