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n AfricaGrowth Agenda - The possible institutional trinity in South Africa's monetary policy decision-making : a proposal

Volume 2011, Issue 10
  • ISSN : 1811-5187

Abstract

Over the years central banks worldwide have increasingly recognised the importance of attaining and maintaining price stability. Consequently, several countries, starting with New Zealand in 1989, embraced formal inflation targeting (IT) as a framework for conducting monetary policy (McCallun, 1998). IT is mainly characterised by four elements. First, there must be a vivid commitment, usually by legislation, stipulating that price stability is the main goal of monetary policy. Second, the numerical range or specific number is announced. Third, IT is a relatively more transparent monetary policy strategy which facilitates communication with the markets about the objectives, and decisions of the central bank. Finally, it also allows for more credible and accountable central banks (Mishkin, 2004). South African Reserve Bank (SARB) adopted this monetary policy framework in 2000. Thereafter, the monetary policy committee (MPC) was constituted in order to take decisions on the appropriate monetary policy stance. This essay attempts to investigate the composition of the MPC and its effect on monetary policy decision-making in SA.

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/content/afgrow/10/1/EJC17337
2011-10-01
2020-12-04

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