Monetary Policy in South Africa, 2007-21
This paper reviews South Africa’s monetary policy since 2007 and makes recommendations towards improving the inflation-targeting framework currently in place. Following a surge in inflation into double digits in 2007/08, the South African Reserve Bank managed to guide inflation in line with the 3–6...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | en_US |
| Published: |
2022
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| Online Access: | https://hdl.handle.net/1721.1/141296 |
| _version_ | 1811097775996141568 |
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| author | Patrick, Honohan Orphanides, Athanasios |
| author_facet | Patrick, Honohan Orphanides, Athanasios |
| author_sort | Patrick, Honohan |
| collection | MIT |
| description | This paper reviews South Africa’s monetary policy since 2007 and makes recommendations towards improving the inflation-targeting framework currently in place. Following a surge in inflation into double digits in 2007/08, the South African Reserve Bank managed to guide inflation in line with the 3–6 per cent target band. Estimates of South Africa’s
potential output underwent successive downward revisions. The resulting output gap misperceptions contributed to the tendency of inflation to be closer to the upper edge of the band in the 2010s. Our assessment is that the current definition of the target is not ambitious enough and reduces the benefits that inflation targeting could otherwise provide. An eventual point target of 3 per cent would better promote growth and protect the value of the currency, as mandated by the Republic’s Constitution. |
| first_indexed | 2024-09-23T17:04:45Z |
| format | Working Paper |
| id | mit-1721.1/141296 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T17:04:45Z |
| publishDate | 2022 |
| record_format | dspace |
| spelling | mit-1721.1/1412962022-03-19T03:00:39Z Monetary Policy in South Africa, 2007-21 Patrick, Honohan Orphanides, Athanasios Monetary Policy, Inflation Targeting, Output Gap Misperceptions, South Africa This paper reviews South Africa’s monetary policy since 2007 and makes recommendations towards improving the inflation-targeting framework currently in place. Following a surge in inflation into double digits in 2007/08, the South African Reserve Bank managed to guide inflation in line with the 3–6 per cent target band. Estimates of South Africa’s potential output underwent successive downward revisions. The resulting output gap misperceptions contributed to the tendency of inflation to be closer to the upper edge of the band in the 2010s. Our assessment is that the current definition of the target is not ambitious enough and reduces the benefits that inflation targeting could otherwise provide. An eventual point target of 3 per cent would better promote growth and protect the value of the currency, as mandated by the Republic’s Constitution. 2022-03-18T17:30:39Z 2022-03-18T17:30:39Z 2022-03-18 Working Paper https://hdl.handle.net/1721.1/141296 en_US MIT Sloan School of Management Working Paper; United Nations University;WIDER Working Paper 2022/29 Attribution-NonCommercial-NoDerivs 3.0 United States http://creativecommons.org/licenses/by-nc-nd/3.0/us/ application/pdf |
| spellingShingle | Monetary Policy, Inflation Targeting, Output Gap Misperceptions, South Africa Patrick, Honohan Orphanides, Athanasios Monetary Policy in South Africa, 2007-21 |
| title | Monetary Policy in South Africa, 2007-21 |
| title_full | Monetary Policy in South Africa, 2007-21 |
| title_fullStr | Monetary Policy in South Africa, 2007-21 |
| title_full_unstemmed | Monetary Policy in South Africa, 2007-21 |
| title_short | Monetary Policy in South Africa, 2007-21 |
| title_sort | monetary policy in south africa 2007 21 |
| topic | Monetary Policy, Inflation Targeting, Output Gap Misperceptions, South Africa |
| url | https://hdl.handle.net/1721.1/141296 |
| work_keys_str_mv | AT patrickhonohan monetarypolicyinsouthafrica200721 AT orphanidesathanasios monetarypolicyinsouthafrica200721 |