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The Congress of South African Trade Unions is bitterly disappointed at the Reserve Bank Monetary Policy Committee's decision to keep the repo rate it at its present excessively high level. The MPC has missed yet another opportunity to save and create jobs by giving a boost to investment and growth.

Manufacturing industry in particular will be angry at yet another conservative monetary policy decision, based on a baseless fear of rising inflation, at a time when it is actually going down rather than the very real crisis of high unemployment and widespread poverty

The decision flies in the face of the groundswell of support for cuts in interest rates, for example in the recent joint statement by COSATU, FEDUSA and NACTU and manufacturing businesses. It identified the unavailability of finance, and the exorbitant level of lending rates by the banks as one of the biggest problems facing our economy. Borrowing remains prohibitively expensive for would-be investors in manufacturing and as a result jobs are still disappearing.

This joint declaration, which was welcomed by President Zuma, insists that a more progressive and expansionary monetary policy is "critical if we are to stem the massive job loss, the threat of deindustrialisation, and revive and expand the productive capacity which has been seriously eroded by the economic crisis."

Another 171 000 jobs disappeared in the first quarter of 2010 alone and the slow level of economic growth is too weak to reverse the trend. As a result, poverty is growing relentlessly. It is the underlying reason behind the tragic re-emergence of xenophobia, high levels of criminality and the collapse of morality and family values.

But the MPC clearly cannot see the devastating consequences of their slavish adherence to discredited monetary policies, based on a misguided fear of inflation.

These policies threaten to undermine progressive, expansionary programmes like IPAP2, and clearly contradict the ANC manifesto commitment to ensure that "fiscal and monetary policy mandates including management of interest rates and exchange rates need to actively promote creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives."

The federation will shortly be publishing its policy proposals for a new economic growth path, and it will include a strong demand for substantial cuts in the repo rate and other monetary policy changes to restructure the economy and create jobs.