Disappointment has been voiced over the Reserve Banks decision to increase the repo rate by 50 basis points in response to rising inflation.

Trade federation Cosatu says while they acknowledge that price stability is important, they feel that for an economy that suffers from large external shocks, depressing demand through an interest rate hike does not make sense. It notes that the main driver of inflation now has not been demand but the sky rocketing oil prices.

A renewed call has been made for the central bank’s mandate to be altered and for monetary policy to be in support fiscal policy stances.

Cosatu says the country needs a Reserve Bank that masters the balance of maintaining inflation-targeting, protecting the value of the rand, living standards and the value of investment capitals, whilst still prioritising employment.