Cosatu and two key opposition parties expect the monetary policy committee to cut the repo rate by at least 50 basis points when Reserve Bank governor Gill Marcus makes the announcement this week.
However, the DA believes that the committee, which will be sitting for only for the second time since Marcus took over from Tito Mboweni on November 9 last year, will keep the benchmark rate as it is.
Patrick Craven, the spokesman for Cosatu, said that the trade union federation had been calling consistently for a repo rate reduction. Given that South Africa was not yet out of a recession, he said, the economy needed the stimulation of a 200 basis point cut.
Nick Koornhof, the finance spokesman for Cope, said that his party was expecting a 50 basis point cut. "I believe they (the committee) will do it. That is the right thing," said Koornhof. "It would stimulate the economy and swing domestic investors towards making investments."
It would also be good for the residential housing market, "which is just lifting its head", said Koornhof, noting that the committee now only met every 60 days rather than every 30 days as in the recent past.
With projections that the economy could grow 3 percent this year, an interest rate hike would be a positive signal from Marcus. "She can do it."
But DA deputy finance spokesman Marius Swart said he did not believe that the committee would make a change.
While he agreed that there was pressure to stimulate spending to fuel economic growth, there were inflationary risks to lowering the rate.
With promised increases in electricity and fuel prices likely to climb, it was not good to keep interest rates too low..
ID finance spokesman Lance Greyling said his party was in favour of relaxation in terms of monetary policy "if the space is there in terms of inflation to reduce interest rates and, at once, to reduce the burden of consumers".
The committee, however, would need to look carefully at what was happening in the global economy as one of the threats to the local economy was the "stop-start effect" when the stimulus packages in the major industrialised nations started to dry up. That could mean that growth would dip again.
However, Greyling believed that a reduction in the repo rate would help to drive South Africa's economic recovery.
"Having lost about a million jobs last year, we have to put the focus on growing the economy," he said.