Monetary Policy Transparency and Financial Market Forecasts in South Africa

May 1, 2007

Preview Citation

Format: Chicago

Vivek B. Arora Monetary Policy Transparency and Financial Market Forecasts in South Africa, (USA: International Monetary Fund, 2007) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The transparency of monetary policy in South Africa has increased substantially since the end of the 1990s; but little empirical work has been done to examine the economic benefits of the increased transparency. This paper shows that, in recent years, South African private sector forecasters have become better able to forecast interest rates, are less surprised by reserve bank policy announcements, and are less diverse in the cross-sectional variety of their interest rate forecasts. In addition, there is some evidence that the accuracy of inflation forecasts has increased. The improvements in interest rate and inflation forecasts have exceeded those in real output forecasts, suggesting that increases in reserve bank transparency are likely to have played a role.

Subject: Economic forecasting, Exchange rates, Inflation, Inflation targeting, Monetary policy transparency

Keywords: Exchange rate, Interest rate, Market, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/123
Stock No:

WPIEA2007123
ISBN:

9781451866872
ISSN:

1018-5941

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