IFP PRESS STATEMENT BY: 
MR HENNIE BEKKER MP
IFP ECONOMIC AFFAIRS SPOKESPERSON

10th June 2008

The Inkatha Freedom Party would like to urge the South African Reserve Bank governor, Tito Mboweni, NOT to take drastic measures by hiking the interest rate by two percent on Thursday, said Mr Hennie Bekker MP, the IFP's Economic Affairs Spokesperson.

The central bank has since June 2006 raised the repo rate on nine occasions - by 50 basis points each time - to 11.5%. The IFP strongly believes that many South Africans are already on the brink of financial ruin and that another massive interest rate hike will only make matters worse.

Mr Bekker commented: "We would like to urge Governor Tito Mboweni not to hike the interest rate by a massive margin when the Monetary Policy Committee meets on June 12.

"Due to trying economic conditions, cash-strapped South Africans are already struggling to cope with higher petrol, food and electricity prices and another increase would cause further undue hardship in the lower and middle income groups.

"The Governor must take into consideration that inflation, as presently being experienced, is largely due to pressures from high global oil and food prices - factors which are totally outside the control of the South African Reserve Bank."

Mr Bekker continued: "Whilst the IFP believes in inflation targeting, the current 3-6% band is not appropriate if the current unstable economic environment is taken into consideration.

"We believe that it might be time for government to review the 3-6% inflation band and adjust it upward. When our economic situation stabilises we can always revisit the band and adjust it downward if needed. This might be a far better approach than simply raising the interest rates again and thus further punishing struggling South Africans," concluded Mr Bekker.