Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259385 
Year of Publication: 
2022
Series/Report no.: 
WIDER Working Paper No. 2022/29
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
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.
Subjects: 
monetary policy
inflation targeting
output gap misperceptions
South Africa
JEL: 
E52
E58
E61
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-160-0
Document Type: 
Working Paper

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