ECS3701 Assignment
2 (COMPLETE
ANSWERS) Semester
1 2025 - DUE 9 May
2025
NO PLAGIARISM
[Pick the date]
, Question 1 (a) According to this excerpt, with the recent monetary policy
stance on keeping the repo rate unchanged, what effect will this have on the
economy. Will this monetary policy approach have a positive, negative or a
more neutral effect on the economy? Explain your answer. [5]
1. Continuation of Lower Borrowing Costs
Although the repo rate was not lowered further, it remains at a historically low level
(7.5%) due to previous cuts.
This means loans remain relatively affordable for businesses and consumers.
Lower borrowing costs encourage borrowing, investment, and spending—key drivers of
economic growth.
2. Policy Certainty and Stability
By keeping the repo rate steady, SARB provides a sense of policy stability to markets,
investors, and consumers.
Predictability in interest rates helps businesses plan and make investment decisions more
confidently.
3. Support for Economic Growth
The SARB has explicitly stated that the rate decision is intended to “support economic
activity.”
This shows the central bank remains committed to fostering conditions conducive to
recovery and long-term growth.
4. Stimulus Effect Continues
The cumulative effect of previous rate cuts continues to filter through the economy.
Consumers may still benefit from lower debt repayment costs, freeing up income for
other spending.
Businesses may take advantage of lower financing costs for expansion and operations.
2 (COMPLETE
ANSWERS) Semester
1 2025 - DUE 9 May
2025
NO PLAGIARISM
[Pick the date]
, Question 1 (a) According to this excerpt, with the recent monetary policy
stance on keeping the repo rate unchanged, what effect will this have on the
economy. Will this monetary policy approach have a positive, negative or a
more neutral effect on the economy? Explain your answer. [5]
1. Continuation of Lower Borrowing Costs
Although the repo rate was not lowered further, it remains at a historically low level
(7.5%) due to previous cuts.
This means loans remain relatively affordable for businesses and consumers.
Lower borrowing costs encourage borrowing, investment, and spending—key drivers of
economic growth.
2. Policy Certainty and Stability
By keeping the repo rate steady, SARB provides a sense of policy stability to markets,
investors, and consumers.
Predictability in interest rates helps businesses plan and make investment decisions more
confidently.
3. Support for Economic Growth
The SARB has explicitly stated that the rate decision is intended to “support economic
activity.”
This shows the central bank remains committed to fostering conditions conducive to
recovery and long-term growth.
4. Stimulus Effect Continues
The cumulative effect of previous rate cuts continues to filter through the economy.
Consumers may still benefit from lower debt repayment costs, freeing up income for
other spending.
Businesses may take advantage of lower financing costs for expansion and operations.
