Case study

Dr David Kganyago is the governor of the central bank in a rapidly developing country. He is head of the committee that decides what form the tools used to implement monetary policy should take. A collaborative economic report by the central bank's economists indicates the following:

The CPI and the PPI are decreasing.

The country's exports of oil, platinum, maize and fresh produce are on the increase.

Political upheaval in developed countries such as North America, Great Britain and France have resulted in a weakening of the US Dollar ($), Pound Sterling () and the Euro ().

The employment rate is expected to increase.

The GDP is expected to increase.

Required:

What sort of monetary policy should be implemented by Dr Khumalo and the central bank's committee? How will this policy affect interest rates, and the consumption and spend of consumers and businesses across the country? ( 1.5 pagee)