The Congress of South African Trade Unions (Cosatu) has condemned the Reserve Bank’s decision not to reduce interest rates.

In a press statement, the union claimed that the decision would fuel the overvaluation of the rand, which, in turn, had cut economic growth to the lowest point in five years, leading to retrenchments in the manufacturing sector.

Cosatu said that while inflation did increase slightly in the past month, maintaining a high interest rate was not a useful way to address it, as unemployment was currently a far greater threat than inflation.

Cosatu’s eighth National Congress in 2003 resolved that the Reserve Bank should reduce interest rates in order to encourage a lower rand.

This demand was reportedly reaffirmed by the Central Executive Committee of the past three days.

The union, in turn, called on the bank urgently to review its decision on interest rates, and to reconsider its overall approach to the short-run trade offs between inflation and growth.