Answer to Question #202726 in Microeconomics for Odwa

Question

Conclusion As a response to Covid-19 the SARB cut its benchmark interest rate to a low record. In the last meeting held on the 25^th March 2021, the South African reserve bank’s Monetary Policy Committee (MPC) announced that interest rates would remain stable at 3.5 percent and the prime lending rate at 7 percent. This was largely in line with Economist's expectations.

Answer 1

The policymakers’ expectation for the SARB to reduce its benchmark interest rate to a lower rate came true. the decision was welcomed ny many as a foundation for economic recovery. In this scenario, economists argued that the inflation outlook and growth outlook were evaluated and found to be balanced. The economists advocated for a slow economic recovery, which will play a key role in maintaining inflation below the mid-point of the targeted range, possibly for two years.