An increase in interest rates by the SA Reserve Bank will slow down the economy and result in recession and job losses, the United Association of South Africa (Uasa) said on Thursday.

Spokesperson Andre Venter said the union was deeply concerned about Reserve Bank governor Tito Mboweni's warning that interest rates may rise by up to two percentage points next month.

"Our contention is that if interest rates are raised that much under the present economic conditions, it will slow down the economy even further, resulting in recession and jobs being lost," Venter said.

He said the government was partly responsible for price pressures by increasing administrative prices.

"How can school fees and toll gate fees rise over six percent when government departments or agencies set them?

"Government must adhere to its own rules and not just set rules that punish normal households who have no control over these inflation rates," Venter said.

Finance union Sasbo on Wednesday expressed similar concerns and called on its 66 000 members to fax the Reserve Bank in protest to the possible hikes.

On Thursday trade union federation Cosatu followed by saying that raising interest rates would worsen the conditions that had led to the recent attacks on foreigners.

Cosatu said the policy was completely inappropriate for a developing country like South Africa with such high levels of unemployment and poverty.

Uasa called on the government and the Reserve Bank to explore other ways of curbing inflation effectively.

Sapa