The Relationship between the Repo Rate, Disposable Income, Inflation and In Turn Economic Growth in South Africa

In Africa for example, savings rates of around 17% of GDP compare to 31% on average for middle income countries. Low savings rates and poorly developed or malfunctioning financial markets make it more expensive for African public and private sectors to get funds for investment as higher borrowing costs impede capital investment. Moreover, in

by 12.5% which was well above the goal of 4.7%. The downside is, when this was created it

However, the bond rate isn't the only determining factor on your mortgage rate. The housing market itself has a great deal of influence on it as well. This impact is also the result of supply and

South Africa is a primary-sector economy, which produces gold and agricultural goods and is therefore primarily product dependent. Primary product dependency is a constraint on economic development. The dependency makes South Africa very vulnerable in the event of natural disasters. Furthermore, downward price fluctuations caused by exchange rate movements or variable harvests can have a devastating impact due to the low price elasticity of demand for primary products.

Interest rate is the percentage of the loan that is charged as interest. The interest rate is determined by 3 factors. The first is the rate that the Federal Reserve bank charges the banks. The second aspect that determine the interest rates is the demand and supply of bonds and treasury notes. Finally, the third aspect of the interest rate is determined by the bank. The bank sets the rate according to their needs.

Give the interest rate is 1 and a half times that of prime lending rate,

Installment loans are available in two types. Secured installment loans require the borrower to pledge collateral. If you finance a car, for example, the lender can repossess it if you fail to make your payments. A mortgage is another type of secured installment loan; if you fail to make your payments, the lender can foreclose. Because the lender has greater confidence that the loan will be repaid or that

Why did South Dakota decide to eliminate the cap on interest rates? Short answer: South Dakota decided to eliminate the cap on interest rates because it is not keeping up with the increasing costs of money and the interest cap in the state is lower than the national interest rate. In 1979, the 9-percent-range mortgage loan rates had been increasing to 9.75 percent. Short-term rates moved up faster (Hajek, 2004). However, the lending rates, capped by usury laws, were trailing the rapidly rising money costs nationwide. This is the time when the Federal Reserve Regulation Q had been phasing out and Chairman Paul Volcker decided to let the rates float on supply-and-demand forces. The South Dakota Bankers Association Legislative Committee (SDBALC) believed that eliminating the lending rate cap would let it loose to keep up with the increasing money costs. The approach was not to remove the usury law (a complex legislative move), but to gain exemption from the usury law for regulated institutions (e.g.

Meanwhile, sellers of Treasury securities use repos to borrow securities they do not own, or in other words to cover

Federal governments through the central banks bear the role sustaining a stable economy for its citizens. Besides the fiscal policy, monetary policy is a core approach utilized to regulate the money supply in the economy. In an economic perspective, increased money supply strengthens the consumers ‘purchasing power prompting them to continue borrowing with an urge to invest. Consequently, interests rate raises while the price for bonds lowers, thus causing inflation. To level, the government may intervene in central banks by increasing the bank lending rate as a strategy to reduce supply of money in the market.

1. As per the IBIS report, the rate of interest are rising in very short period but expected to level out at

Fixed interest rate means repayment of home loans in fixed equal installments over the entire period of the loan. In this case, the interest rate doesn't change with market fluctuations. During the early part of the loan tenure the majority of monthly payments are used to service the interest and the principal is served in the later parts of the tenure.

The discount rate and the matching prices of the treasury bills are determined at each auction. When liquidity is tight in the economy, returns on Treasury Bills sometimes become even higher than returns on bank deposits of similar maturity.

Also, Rabobank could raise floating rate debt at LIBOR – 1/8% (LIBOR + ¼% - 3/8%) since it is an AAA rated bank.

In this presentation I will discuss whether or not the South African fiscal and monetary policy are complimentary or not. We need to first define both the fiscal and monetary policy in their economic sense. Firstly, the formal definition of the monetary policy are all the deliberate steps of the monetary authority to affect monetary aggregates such as the money supply, the availability of credit, and interest rates in order to influence monetary demand, income, production, prices and the Balance Of Payments (Frederick C v N Fourie, Phillip Burger, 2009, 349). Monetary policy is the responsibility of the Reserve