Ocran, M. K.Rumutsa, Norman,2026-09-032026-09-032024https://hdl.handle.net/10566/25330Sustainable economic growth remains a critical challenge for South Africa, a context in which understanding the dynamic interplay between interest rates, savings, and investment is essential for effective policymaking. This study explores the impact of interest rates on savings and investment behaviour amid fluctuating monetary policies implemented by the South African Reserve Bank. Employing advanced econometric techniques, including unit root tests (Augmented Dickey-Fuller and Phillips-Perron), Johansen cointegration analysis, error correction modelling (ECM), and Granger causality testing, the research identifies both short-run and long-run relationships among key macroeconomic variables. The findings reveal a statistically significant negative relationship between interest rates and investment, underscoring the deterrent effect of rising borrowing costs on capital formation. Conversely, interest rates are found to have a positive but weaker impact on household savings, which suggests that rate increases provide modest incentives for the propensity to save. Moreover, the study confirms that gross domestic product (GDP) per capita plays a pivotal role in shaping savings and investment patterns. The ECM results indicate that deviations from the long-run equilibrium are corrected relatively quickly, highlighting the responsiveness of these economic variables to monetary shocks. These insights contribute valuable empirical evidence to the South African economic literature and carry important implications for the formulation of balanced monetary policies.enInvestmentUnemploymentEconomic growthsavingsThesis