Previous page | New search |
The free AfricaBib App for Android is available here
Periodical article | Leiden University catalogue | WorldCat |
Title: | Much ado about nothing: a note on the modified inflation target |
Author: | Du Plessis, S.A. |
Year: | 2003 |
Periodical: | South African Journal of Economics |
Volume: | 71 |
Issue: | 2 |
Pages: | 407-413 |
Language: | English |
Geographic term: | South Africa |
Subjects: | monetary policy inflation |
External link: | https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2003.tb01315.x/pdf |
Abstract: | On 29 October 2002 South Africa's finance minister Trevor Manual used the medium-term budget policy statement to adjust the South African Reserve Bank's (SARB) target range for forecasted inflation in 2004. He raised the upper edge of the range for forecasted inflation from 5 percent to 6 percent - for the annual average of Consumer Price Index inflation - on that occasion. This note presents a brief argument and an example to demonstrate that this change is much ado about nothing. Amongst others, two problems undermine attempts to establish credibility for the SARB's inflation targeting regime. They are the use of a band as opposed to a point target, and the use of an annual average as opposed to a defined horizon target. The recent adjustment to the target band for 2004 (and beyond) does not address these problems. Consequently, the government gained little flexibility for the SARB, at the cost of having publicly softened the target. Bibliogr., notes. [ASC Leiden abstract] |