South Africa initially fixed and then managed its exchange rate, with a process of financial liberalisation facilitating the adoption of inflation targets in 2002.
| Years | Targets and attainment | Classification |
| 1974-78 | exchange rate pegged to USD for 6 months, managed for 12 and then repegged to USD, with devaluation September 1975; more fix than target, with narrow margins set by central bank; monetary policy instruments mainly direct | augmented exchange rate fix AERF |
| 1979-2002 | managed float of exchange rate; gradual liberalisation through 1980s makes monetary policy instruments more indirect and brings fiscal dominance under control; monetary targets 1986-9, missed 3 years out of 4, authorities insist on objectives other than inflation; central bank made independent in 1996 constitution; from 1998 new repo-based interest rate operations and authorities looking to move to formal inflation targeting, which starts 2002 with large overshoot | loosely structured discretion |
| 2003-23 | wide inflation targets met or nearly met (typically around top of band) except 2008-9 and 2022; 2-year ahead inflation expectations seem to have exceeded top of band in 2008 but since then have remained consistently around or just below top of band; major effect of and policy response to Covid-19; mid-2022 adjustment to monetary policy implementation framework involving different reserve remuneration for different tiers of banks’ reserves | loose inflation targeting LIT |
Selected IMF references: RED 1978 pp42-6; RED 1980 pp61-2; RED 1983 pp43-6; RED 1988 pp57-9; RED 1989 pp41-3; SR 1989 p20-21; SI 1998 pp25-6; SR 1998 p30; SR 2011 p16; SR 2014 p38; SR 2016 p41; SR 2018 pp35-6, 80-86; SR 2023 pp10, 14-16, 71-7;
Additional sources: Stals (2011); Aron and Muellbauer (2006); South African Reserve Bank, Monetary Policy Review October 2023 pp7-9; Monetary Policy Review April 2024 pp35-6.
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Monetary Policy Frameworks 