Answer to Question #188525 in Microeconomics for Franscois

Question

3. The next Monetary Policy Committee meeting is taking place on 18-20 May 2021. The ongoing debate

at the moment is that the SARB is not doing enough to help the government with its growing debt crisis, hence there has been recalls of the institution doing more than lowering the repo rate. Is this argument justified? How would you suggest the SARB proceed, taking into consideration the current fiscus issues? Provide a short monetary policy package in light of the above mentioned situation and use practical case studies to back up your answer.

Answer 1

As we can see according to previous data , it was welcomed warmly as follows-   

This decision was taken to manage the covid - 19 pandemic , as we know that the situation that arised.Due to this pandemic , by result of this many people lost their livelihood , the decision taken by SARB is like life saving.  

The decision that is taken by the SARB to cut repo rate is appreciated by the people of the country .

It was based on bbp that is 50 basis points , 3.1% on may 2021 . They had binged a cumulative reduction of 275 bps , which is the lowest in the history of democratic era.  

Results of this is on currently on going pandemic is good and it will give a good effect , as things will go right and the country may get the positive outcome in future.  

Things are similar to previous year , but I say more critical compare to previous year , so the decesion must be up to the mark , as per the situation , so the the economy can come on the right track.