The Reserve Bank is overly sensitive and is making a mistake with the latest interest rate increase as it is only going to slow down economic growth in South Africa more, Adv. Anton Alberts, the FF Plus’ parliamentary spokesperson on the economy says.
Adv. Alberts says the factors which have led to the increase of 25 basis points yesterday are not necessarily related to consumer action, but are factors which are out of their control, such as the faltering Rand as a result of political uncertainty, especially since Nene-gate, the tremendous drought which hit the country and the unhealthy circumstances of the world economy.
“These factors were correctly summed up by the Reserve Bank as being valid points, but an interest rate increase will now merely bring about less money being spent in the local economy while we actually need an injection of funds through more spending.
“Given the country’s chaotic political environment there is also no certainty that an interest rate increase will bring more international investments. The Reserve Bank should rather focus on freeing up the economy to improve and ensure growth.
“This means debt must be made cheaper and the consumer should not be punished for factors totally out of their control.
“It is time to be courageous and break South Africa free from its economic bonds and the Reserve Bank could play a big role in this by sending a message to government to deregulate the labour market, change policy which frightens investors away, change BEE to economic empowerment of poor people in general and remove race from the economy and replace it with merit.
“A sensible environment should therefore be created for foreign investors so that they seriously consider South Africa as an investment destination,” Adv. Alberts says.