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Qualitative Guidance and Predictability of Monetary Policy in South Africa

With the adoption of the in ation targeting (IT) regime in 2000, the South African Reserve Bank (SARB) became independent. With the independence of monetary policy comes accountability to the public at large, which in turn leads to transparency in the conduct of monetary policy. The SARB has come a long way in its communication strategy. In 2014 it adds another layer in its communication strategy by announcing explicitly throughout 2014 that monetary policy was on the rising cycle until normalisation is reached. Monetary policy committee (MPC) statements of March and May 2014 refer to normalisation as the return of the policy rate (repo rate) from the historical lowest level of 5 per cent to the normal level in the long run. Like many central banks, the SARB reduced the policy rate from 12 per cent to 5 per cent following the Global Financial Crisis (GFC).

Working paper 626
1 August 2016
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