Inflation Targeting in South Africa: Friend or Foe of Development?

In this study we focus on the South African experience with inflation targeting. We make two major claims in this paper. First, the South African experience with inflation targeting before the crisis was not successful, not in terms of advocates’ self-stated goals and certainly not in terms of key, ultimate real sector goals such as lower unemployment and higher economic growth. Second, as in a number of other countries, the SARB policy regime as well as its rhetoric about monetary policy significantly changed in response to the crisis of 2008. While these changes are an important step in the right direction of reorienting monetary policy toward important real goals of employment generation and economic growth, they are nevertheless still not adequate to the crucial task of creating a macroeconomic framework geared toward achieving these crucial goals.