Monetary Policy and Relative Price Shocks in South Africa and Other Inflation Targeters

December 1, 2008

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Format: Chicago

Alfredo Cuevas, and Secil Topak. Monetary Policy and Relative Price Shocks in South Africa and Other Inflation Targeters, (USA: International Monetary Fund, 2008) accessed September 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

When faced with a relative price shock, monetary authorities often aim to contain its second round effects on inflation while accepting first round effects. We analyze the experience of South Africa and other inflation targeters to explore whether and when this policy prescription implies changing the monetary policy stance. Inflation targeting central banks differ on how aggressively they typically react to relative price shocks, reflecting differences in resilience of underlying inflation to such shocks. An examination of individual policy decisions reveals the importance of the broader economic context in framing the responses to relative price shocks.

Subject: Banking, Food prices, Inflation, Inflation targeting, Oil prices

Keywords: Central bank, Monetary policy, Price, Price shock, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/289
Stock No:

WPIEA2008289
ISBN:

9781451871470
ISSN:

1018-5941

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