An investigation of the relationship between inflation and interest rates in Swaziland.

Abstract

Abstract Inflation rate and interest rate are some of the two economic variables that are used by governments across the world to monitor and ensure that economic performance is within meaningful limits. While inflation is the persistent increase in general prices for the commodities namely goods and services, interest rates is considered as technique that is used to regulate the levels of inflation because it would reduce the overall demand of money available in the society. This study engaged a quantitative research approach which was based on a review of secondary information with regards to the trends of both inflation and interest rate over the period of five years(2010 t0 2014) in Swaziland. Data was analysed using Microsoft computer excel software that enabled the projection of the findings of the study in form of graphs and bar charts. The general data for the study, however, indicated the highest level of inflation rate was recorded at 8.9% in 2012 when the interest rate was at 10% in 2010 respectively. The study established that there was some positive collaboration between inflation rate and interest in the sense that in the event inflation increased, interest rates were perceived to have been cushioning and policies ensured that the rate of inflation was being regulated. The purpose for this study was to analyse and establish statistical trends with regards to the relationship between the interest rates and inflation with reference to the Swaziland economy. However, the future areas of interest would be influenced with the notion of the level of impact of inflation and interest rate had to the economy.