How coronavirus will dominate African interest rate decisions JOHANNESBURG ‐ Central bankers in five key sub‐Saharan African countries will meet on interest rates in the next ten days as the focus turns to them for measures to shore up their economies that are expected to be hit by the novel coronavirus. “We expect the Covid‐19 outbreak and current market turmoil to be major points of discussion as policymakers deliberate on the rate decision, with the bias certainly downwardsfor those countries which have scope to cut,” said Ridle Markus, an economist for sub‐Saharan Africa at Absa Bank Ltd. Policymakers in oil‐producing countries “will need to balance the significant downside risks to growth, brought by the slump in oil prices, against the risksresulting from the deteriorating balance of payments and worsening inflation outlook,” he said. Here’s what central bankers in the region may do in the next ten days: South Africa, March 18 ‐ Repurchase rate: 6.25% Inflation rate: 4.5% (January) By Prinesha Naidoo Time of article published Mar 17, 2020 Based on the projections of the repurchase rate in the extract above. Explain, with the aid of a graph, the impact of a cut in the interest rate on the demand for money.
How coronavirus will dominate African interest rate decisions
JOHANNESBURG ‐ Central bankers in five key sub‐Saharan African countries will meet on interest
rates in the next ten days as the focus turns to them for measures to shore up their economies that
are expected to be hit by the novel coronavirus.
“We expect the Covid‐19 outbreak and current market turmoil to be major points of discussion as
policymakers deliberate on the rate decision, with the bias certainly downwardsfor those countries
which have scope to cut,” said Ridle Markus, an economist for sub‐Saharan Africa at Absa Bank Ltd.
Policymakers in oil‐producing countries “will need to balance the significant downside risks to
growth, brought by the slump in oil prices, against the risksresulting from the deteriorating balance
of payments and worsening inflation outlook,” he said.
Here’s what central bankers in the region may do in the next ten days:
South Africa, March 18 ‐
Repurchase rate: 6.25%
Inflation rate: 4.5% (January)
By Prinesha Naidoo Time of article published Mar 17, 2020
Based on the projections of the repurchase rate in the extract above.
Explain, with the aid of a graph, the impact of a cut in the interest rate on the
demand for money.
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