The Public Servants Association (PSA) has urged the Monetary Policy Committee (MPC) to seriously consider a reduction in interest rates to alleviate the financial pressure on citizens.

The PSA’s appeal is based on recent observations by economists, highlighting the financial burden on South Africans, particularly public servants, owing to what it calls the South African Reserve Bank's “unnecessary” interest-rate hikes.

The PSA said public servants should not be unduly burdened by excessive financial costs, especially when such measures were avoidable, and pointed out that they played a crucial role in the functioning of society.

The PSA said it believed that high interest rates were unjustifiable and detrimental to the financial wellbeing of citizens.

It pointed out that South Africans were facing multiple financial challenges, exacerbated by the economic strain of the Covid-19 pandemic, and said the recent interest-rate hikes had resulted in an inequitable financial situation.

“Lowering interest rates will assist in stabilising the financial security of workers and contribute significantly to the overall economic recovery of South Africa,” the PSA said.

It further argued that a reduction in interest rates would provide immediate financial relief to workers and other South Africans, while lessening the burden of high debt-servicing costs including making mortgages more affordable.

“With the current inflation outlook well within the target range, there is ample room for the MPC to consider a reduction in interest rates without risking inflationary pressures,” it said.

The PSA explained that economic recovery would be supported as lowering interest rates would encourage spending and investment, which would stimulate economic growth and aid the country's recovery from the effects of the Covid-19 pandemic.

It added that lower interest rates would also lead to increased business activity, which it said would promote job creation and stability.