2.1
The MPC's decision to lower the repurchase rate by 25 basis points to 8.80% per year will have the
following effects on the money market in South Africa:
Increased demand for money: When interest rates are lowered, the opportunity cost of holding cash
decreases, which makes people more likely to hold money. This is because they can earn a higher return
by holding cash than by inves ng in other assets, such as bonds or stocks.
Increased supply of money: Commercial banks are also more likely to lend money when interest rates
are lowered, as they can earn a higher profit margin on loans. This increases the supply of money in the
economy.
Lower interest rates: When the supply of money increases and the demand for money increases, the
price of money, which is the interest rate, decreases.
, 2.2
The MPC's decision to lower the repurchase rate by 25 basis points to 8.80% per year will have the
following effects on the money market in South Africa:
Increased demand for money: When interest rates are lowered, the opportunity cost of holding cash
decreases, which makes people more likely to hold money. This is because they can earn a higher return
by holding cash than by inves ng in other assets, such as bonds or stocks.
Increased supply of money: Commercial banks are also more likely to lend money when interest rates
are lowered, as they can earn a higher profit margin on loans. This increases the supply of money in the
economy.
Lower interest rates: When the supply of money increases and the demand for money increases, the
price of money, which is the interest rate, decreases.
, 2.2
