Unions and analysts are hoping for an interest rate cut of between half and one and a half percentage points when the SA Reserve Bank's Monetary Policy Committee meets on Thursday.

"We call on the Reserve Bank Governor and the MPC to cut interest rates by 1.5 percent," urged the Food and Allied Workers Union on Wednesday.

"The MPC cannot play indifferent to the shrinking gross domestic product (GDP) growth and the widespread retrenchments in mining and manufacturing sectors."

Other central banks had cut rates to defend growth in their economies so the SA Reserve Bank's MPC should be bold and do the same, the union said.

Trade union Solidarity aimed for one percentage point so that job losses could be limited by stimulating local demand for products and services.

Solidarity released a report this week warning that if the global economic crisis and the consequent weakening of the South African economy continued into 2009, up to 310,000 jobs could be lost.

Lowering interest rates would also make it easier for the trade union to convince companies not to continue with retrenchments, said spokesman Jaco Kleynhans.

Prudence in the form of a 50 basis point cut was recommended by Gloria Hadland, associate professor at the University of Cape Town's Economic Research Southern Africa division.

Hadland commented that inflationary pressure was not the biggest fear South Africa was confronting.

"The real worry is the uncertainty around the effect that a standstill of international economy would have on our domestic economic dynamics," she said in a statement.

Growth and consumer expenditure was slow and contracting, with "difficult" export market conditions.

Keeping interest rates unchanged could worsen sentiment and contract internal demand beyond what was required to maintain monetary stability, she said.

Banks track the change to the repo rate announced by the MPC by introducing a corresponding drop, stay, or increase in the interest they charge for loans, bonds and debt, called the prime rate. It also affects the rate of interest consumers pay for anything they buy on credit.

If the interest rate is too low, people have more money available and take more loans, and spend too much, so the increased demand pushes prices up. This makes inflation go up and money lose its value faster.

If it is too high, people are too busy paying off their debts to spend money on anything else, or buying something on credit seems too expensive, so demand for goods and services drops and growth in the economy could be affected adversely.

The SA Reserve Bank tries to keep inflation between three to six percent to keep prices stable.

In inflation without mortgage costs is 12,4 percent and the repo is at 12 percent with prime at 15.5 percent.

The MPC will have its final meeting of the year on Thursday to decide on whether it should change the repo rate -- the rate at which the SA Reserve Bank lends money to banks -- or keep it the same.