monetary policy in south africa 2020

This discussion was ", Stan du Plessis & Ben Smit & Federico Sturzenegger, 2008. Abstract South Africa adopted inflation targeting as its monetary policy framework in February 2000. ", Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1994. All material on this site has been provided by the respective publishers and authors. ", Rangan Gupta & Alain Kabundi & Mampho P. Modise, 2009. and monetary policy measures. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. ", Stan Du Plessis & Ben Smit & Federico Sturzenegger, 2007. The latest monetary policy review from the South African Reserve Bank contains estimates of their expected impact from the Coronavirus on South Africa's unemployment, inflation and economic growth. In addition to continued easing of interest rates, the Bank has taken steps to ensure adequate liquidity in money and government bond markets and to ease capital requirements to free capital for onlending by financial institutions. Monetary policy and firm size in South Africa Small firms generally face greater credit access constraints compared with larger firms. The IMF and other forecasters expect a growth recovery to begin in 2021. With that in mind, the Bank expects GDP in 2020 to contract by 6.1%, compared to the -0.2% expected just three weeks ago. Credit risk has risen back to 2008 levels and about R100 billion of local assets have been sold by non-resident investors. Results from an Agnostic Identification Procedure, Housing Markets, Wealth and the Business Cycle. This has implications for emerging markets and South Africa in particular, as investor appetite for rand-denominated equities and bonds is expected to remain weak. South Africa’s risk profile has increased. This brings to question the role of monetary policy and its effectiveness in the economy. ", Paul Bennett & Richard Peach & Stavros Peristiani, 1998. a Cross-Country Analysis, Has Monetary Policy Become More Efficient? If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form . ", Ruthira Naraidoo & Rangan Gupta, 2009. ". Copyright 2020 Government of South Africa. ", Rangan Gupta & Josine Uwilingiye, 2010. JSE All Share Sunburst chart A time-varying FAVAR model for the UK transmission mechanism, Reconsidering the business cycle and stabilisation policies in South Africa. ", Colin Ellis & Haroon Mumtaz & Pawel Zabczyk, 2014. ", Goodness C. Aye & Christina Christou & Luis A. Gil-Alana & Rangan Gupta, 2016. ", Ben S. Bernanke & Jean Boivin & Piotr Eliasz, 2005. It also allows you to accept potential citations to this item that we are uncertain about. The president stated that the R500 billion relief package is about 10% of South Africa's GDP. ", Bianchi, Francesco & Mumtaz, Haroon & Surico, Paolo, 2009. The decision was unanimous. ", Goodness C. Aye & Mehmet Balcilar & Rangan Gupta, 2016. Each of these steps make more capital available to households and firms. At its policy meeting in mid-January, i.e. Inflation Targeting in Emerging-Market Countries, Inflation Targeting in Emerging Market Countries, The Cyclicality Of Monetary And Fiscal Policy In South Africa Since 1994, The cyclicality of monetary and fiscal policy in South Africa since 1994, The Cyclicality of Monetary and Fiscal Policy in South Africa since 1994, Dynamic Time Inconsistency And The South African Reserve Bank, Evolving UK macroeconomic dynamics: a time-varying factor augmented VAR, American Economic Journal: Macroeconomics, What Lies Beneath? Lower oil prices will reduce petrol prices in the near term. ", Barakchian, S. Mahdi & Crowe, Christopher, 2013. The implied starting point for the rand forecast is R17.80 to the US dollar, compared with R15.40 at the time of the previous meeting. ", Timothy Cogley & Giorgio E. Primiceri & Thomas J. Sargent, 2010. Today (21 April 2020) President Ramaphosa announced a comprehensive social and economic relief package for South Africans to fight off the effects of Covid-19 is having on citizens, businesses and South Africa's economy. We also have intangible variables, such as confidence indices, and survey variables. The forecast error variance decomposition results show the changes in the macroeconomic variables are largely determined by the demand shock relative to the monetary policy shock although the contribution of the latter increased slightly over time. Our results suggest the need for a more efficient role of the monetary authority as this will both improve its credibility and greater economic stability. ", Rangan Gupta & Marius Jurgilas & Alain Kabundi, 2009. Aron and Muelbauer (2002) were the first ones to analyse South African monetary policy using a Taylor rule setting In the 1970s and 1980s, the economies of several developed and developing countries witnessed much volatility in output growth, inflation and other macroeconomic variables. ", Bennett, Paul & Peach, Richard & Peristiani, Stavros, 2001. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Abu N.M. Wahid). ", Stephen G. Cecchetti & Alfonso Flores-Lagunes & Stefan Krause, 2006. South Africa’s lockdown has been Has Monetary Policy become more Efficient? Our results based on the impulse response functions, are consistent with economic theory as we observe no price puzzle that is often associated with the standard VAR models. ", Mehmet Balcilar & Rangan Gupta & Kevin Kotze, 2016. Since the March meeting of the Monetary Policy Committee (MPC), the Covid-19 pandemic has spread globally and its impact is being felt through all economies. This allows for inflation to be out of the target range as a result of first-round effects of a supply shock and for the Bank to determine the appropriate time horizon for restoring inflation to within the target range. At this stage, the sustainability of that recovery remains uncertain, and global markets remain in risk-off mode. A Time‐varying FAVAR Model for the UK Transmission Mechanism, What lies beneath? The uncertainties of the crisis have led to extremely high volatility in financial asset prices, with sharp and deep market sell-offs followed by a partial recovery. The spot price for Brent crude oil is currently around $31 per barrel, despite a new agreement reached by Opec and other producers to make large oil production cuts. How has the monetary transmission mechanism evolved over time? How Has Inflation Targeting Affected Monetary Policy in South Africa? Expectations of future inflation broadly remain around the mid-point of the band, although market-based expectations have recently ticked up in response to the depreciation of the currency. Admittedly, the SARB is already on a path of monetary policy easing having recently (in July 2019 and January 2020) made two 25 basis points cuts in the repo rate. This allows to link your profile to this item. A Cross Country Analysis. Article first published online: May 22, 2020; Issue published: June 1, 2020 Ojo Johnson Adelakun 1, Karima Yousfi 2 1 School of Accounting, Economics & Finance, University of KwaZulu-Natal, South Africa. ", Paul Bennett & Richard Peach & Stavros Peristiani, 1997. The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic.The SARB acts as the central bank for the country and its banking institutions, is co- responsible for formulating South Africa’s monetary policy, and is largely responsible for implementing this policy.The Reserve Bank has a significant degree of autonomy in ter… Nonetheless, prices for many commodities have fallen as a result of weaker demand globally. ", Gupta, Rangan & Jurgilas, Marius & Kabundi, Alain, 2010. A General Equilibrium Approach to Monetary Theory, Comparing South African Inflation Volatility Across Monetary Policy Regimes: An Application of Saphe Cracking, Comparing South African Inflation Volatility Across Monetary Policy Regimes: An Application Of Saphe Cracking, Inflation, Money Demand, and Purchasing Power Parity in South Africa, Agency Costs, Net Worth, and Business Fluctuations, Agency Costs, Net Worth, And Business Fluctuations, Financial markets and the response of monetary policy to uncertainty in South Africa, What are the International Channels Through Which a US Policy Shock is Transmitted to The World Economies? 54(4), pages 55-73, October-D. They are also reliant on banks for financing, whereas larger firms can alternatively issue equity Monetary policy can ease financial conditions and improve the resilience of households and firms to the economic implications of Covid-19. Thereafter, these became considerably low and more stable. The decision was not unanimous, with two out of five MPC members voting for a smaller 25 basis point cut. This takes the repo rate to 4.25% per annum, with effect from 15 April 2020. The overall risks to the inflation outlook at this time appear to be to the downside. ", Liu, Philip & Mumtaz, Haroon & Theophilopoulou, Angeliki, 2011. Weaker domestic growth and greater fiscal risks have resulted in a downgrade by Moody’s credit rating agency and confirmation of a negative outlook by Fitch, a weaker currency and higher borrowing costs for government, banks and firms. Has Monetary Policy Become More Effective? The European Central Bank (ECB) has made similar commitments.Emerging and developing economies generally have less policy space available and credit is more expensive, and for this reason, the International Financial Institutions (the IMF, the World Bank) and others have made available extraordinary levels of emergency financial support. Lesetja Kganyago, governor of South Africa's central bank, speaks during a news conference following a Monetary Policy Committee meeting in Pretoria, South Africa, on Thursday, May 25, 2017. Against this backdrop, the MPC decided to cut the repo rate by 100 basis points. Such steps will further reduce existing constraints on monetary policy and its transmission to lending. Vitor Gaspar, W. Raphael Lam, and Mehdi Raissi عربي, 中文, Español, Français, 日本語, Português, Русский Fiscal policies have provided large emergency lifelines to people and firms during the COVID-19 pandemic. These data capture the broad trends in the South African economy. () (University of Pretoria, South Africa Eastern Mediterranean University, Turkey University of Pretoria, South Africa). Barring severe and persistent currency and oil shocks, inflation is expected to be well contained, remaining below the midpoint of the target in 2020 and close to the midpoint in 2021. Monetary Policy Committee decision announcement on 19 March 2020 The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) press conference is scheduled to take place on Thursday, 19 March at 15:00. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. Fiscal Policy and Economic Growth in South Africa Matthew Kofi Ocran 1 1 Department of Economics, University of Fort H are, Alice (Main) C ampus, Private Mail Bag, X 1314, The timing and size of these contradictory impulses suggests that they are not perfectly offsetting, with weaker inflation in the near term likely giving way to higher inflation later in the forecast period. , whereas larger firms can alternatively issue equity South Africa the potential growth rate the... And survey variables there a role for monetary policy on Output on policy... 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