## The Relative Merits and Implications of Inflation Targeting for South Africa

_IMF Working Papers, August 1, 1999_

## Source details

**Canonical URL:** [The Relative Merits and Implications of Inflation Targeting for South Africa](https://www.imf.org/en/publications/wp/issues/2016/12/30/the-relative-merits-and-implications-of-inflation-targeting-for-south-africa-3255)

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## Bibliographic details
- Authors: Gunnar Jonsson
- Published: August 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451853919.001

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### Summary
- This paper describes the main elements of inflation targeting, reviews its pros and cons, and examines the experiences thus far in countries using this framework.
- It discusses the implications and relative merits of such a framework for South Africa.
- Conclusion: it would be feasible and desirable for South Africa to adopt explicit inflation targeting.
- Potential benefits: reduce uncertainties about the Reserve Bank’s objectives and enhance the transparency of monetary policy.
- Preconditions noted: further experience with the operational aspects of the repurchase system and a refinement of the inflation forecasting framework may be needed before inflation targeting is implemented.

### Major Findings and Analysis
- Inflation targeting framework elements and international experiences are reviewed to assess applicability for South Africa.
- The framework’s pros and cons are evaluated in light of country experiences using inflation targeting.
- Feasibility assessment: explicit inflation targeting is judged feasible for South Africa.
- Desirability assessment: adoption is judged desirable due to expected gains in clarity of objectives and transparency.

### Policy Implications and Recommendations
- Adopt explicit inflation targeting to:
  - Reduce uncertainties about the Reserve Bank’s objectives.
  - Enhance the transparency of monetary policy.
- Prior actions recommended before implementation:
  - Gain further experience with the operational aspects of the repurchase system.
  - Refine the inflation forecasting framework.

### Subject Areas and Keywords
- Subject: Banking, Exchange rates, Foreign exchange, Inflation, Inflation targeting, Monetary policy, Monetary policy frameworks, Monetary policy instruments, Prices
- Keywords: Africa, core inflation, Exchange rates, forecasting framework, Inflation, Inflation Targeting, inflation targeting country, inflation targeting economy, inflation targeting framework, inflation-targeting central banks, introduction of the inflation targeting regime, monetary policy, Monetary policy frameworks, Monetary policy instruments, South Africa, WP

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## Content in this bundle

- **The Relative Merits and Implications of Inflation Targeting for South Africa - WP/99/116**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-relative-merits-and-implications-of-inflation-targeting-for-south-africa-3255_