", Ruthira Naraidoo & Leroi Raputsoane, 2015. VAR analysis, nonfundamental representations, blaschke matrices, VAR analysis, non-fundamental representations, Blashke matrices, Modelling monetary policy in South Africa: Focus on inflation targeting era using a simple learning rule, Trends and Structural Changes in South African Macroeconomic Volatility, Assessing the Transmission of Monetary Policy Using Time-varying Parameter Dynamic Factor Models-super-, Oxford Bulletin of Economics and Statistics, Assessing the transmission of monetary policy using dynamic factor models, Assessing the Transmission of Monetary Policy Shocks Using Dynamic Factor Models. ", Bennett, Paul & Peach, Richard & Peristiani, Stavros, 2001. ", Mehmet Balcilar & Rangan Gupta & Kevin Kotzé, 2017. 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. This was announced by South African Reserve Bank (Sarb) governor … ", Rangan Gupta & Marius Jurgilas & Alain Kabundi, 2009. 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. ", Stan du Plessis & Ben Smit & Federico Sturzenegger, 2008. Both the supply and demand effects of this extension reduce growth and deepen it in the short-term, as businesses stay shut for longer and households with income spend less. 54(4), pages 55-73, October-D. These should be addressed by implementing prudent macroeconomic policies and structural reforms that lower costs generally, and increase investment opportunities, potential growth and job creation. ", Barakchian, S. Mahdi & Crowe, Christopher, 2013. ", Gupta, Rangan & Jurgilas, Marius & Kabundi, Alain, 2010. Nonetheless, prices for many commodities have fallen as a result of weaker demand globally. South Africa’s lockdown has been extended by an additional 14 days, bringing the total lockdown period to 35 days. A Time‐varying FAVAR Model for the UK Transmission Mechanism, What lies beneath? () (University of Pretoria, South Africa Eastern Mediterranean University, Turkey University of Pretoria, South Africa). Monetary policy however cannot on its own improve the potential growth rate of the economy or reduce fiscal risks. 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. ", Ruthira Naraidoo & Leroi Raputsoane, 2013. This allows to link your profile to this item. Lower oil prices will reduce petrol prices in the near term. "The Effectiveness Of Monetary Policy In South Africa Under Inflation Targeting: Evidence from a Time-Varying Factor-Augmented Vector Autoregressive Model," Journal of Developing Areas, Tennessee State University, College of Business, vol. We find evidence of modest time variation in the transmission of shocks. South Africa Monetary Policy September 2020 South Africa: SARB stands pat in September September 17, 2020 On 17 September, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) left the repurchase rate unchanged at its all-time low of 3.50%, after lowering it by 25 basis points in its previous meeting. The forecast for core inflation is lower at 3.8% in 2020, 4.0% in 2021, and 4.2% in 2022. The Effectiveness Of Monetary Policy In South Africa Under Inflation Targeting: Evidence from a Time-Varying Factor-Augmented Vector Autoregressive Model, The Effectiveness of Monetary Policy in South Africa under Inflation Targeting: Evidence from a Time-Varying Factor-Augmented Vector Autoregressive Model, Structural Change in the Mortgage Market and the Propensity to Refinance, Structural change in the mortgage market and the propensity to refinance, What are the effects of monetary policy on output? 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. and monetary policy measures. South African Reserve Bank Current repo average rate: 6.5% Forecast for end of 2020: 6.25% The South African Reserve Bank is facing pressure to … ", Stephen G. Cecchetti & Alfonso Flores-Lagunes & Stefan Krause, 2004. Against this backdrop, the MPC decided to cut the repo rate by 100 basis points. Monetary policy can ease financial conditions and improve the resilience of households and firms to the economic implications of Covid-19. Has Monetary Policy Become More Effective? 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. JSE All Share Sunburst chart ", Liu, Philip & Mumtaz, Haroon & Theophilopoulou, Angeliki, 2011. RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya will soon present his Monetary Policy Statement amid high expectations for a cocktail of measures to arrest the deepening economic crisis characterised by price instability, low disposable incomes and rapid depreciation of the Zimbabwean dollar. The Covid-19 outbreak will have a major health and social impact, and forecasting domestic economic activity presents unprecedented uncertainty. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation. South Africa’s risk profile has increased. Public profiles for Economics researchers, Various rankings of research in Economics & related fields, Curated articles & papers on various economics topics, Upload your paper to be listed on RePEc and IDEAS, RePEc working paper series dedicated to the job market, Pretend you are at the helm of an economics department, Data, research, apps & more from the St. Louis Fed, Initiative for open bibliographies in Economics, Have your institution's/publisher's output listed on RePEc. ", Lippi, Marco & Reichlin, Lucrezia, 1994. ", Goodness C. Aye & Christina Christou & Luis A. Gil‐Alana & Rangan Gupta, 2019. The IMF and other forecasters expect a growth recovery to begin in 2021. Global producer price inflation has decelerated. How do consumers respond to house price declines? The Financial Accelerator and the Flight to Quality, The financial accelerator and the flight to quality, A Bayesian Look at the New Open Economy Macroeconomics, NBER Macroeconomics Annual 2005, Volume 20, A Bayesian Look at New Open Economy Macroeconomics. ", Paul Bennett & Richard Peach & Stavros Peristiani, 1997. ", Stan du Plessis & Ben Smit & Federico Sturzenegger, 2008. ", Rangan Gupta & Alain Kabundi & Mampho P. Modise, 2009. What does this mean to the retail industry? Monetary policy and firm size in South Africa Small firms generally face greater credit access constraints compared with larger firms. ", Marco Lippi & Lucrezia Reichlin, 1994. Structural changes in the US economy: is there a role for monetary policy? How Has Inflation Targeting Affected Monetary Policy in South Africa? ", Ruthira Naraidoo & Rangan Gupta, 2009. Some factors will support growth, including where businesses are able to open under the current rules, new jobs being created to service more needs under the lockdown, and sustained government spending, both through normal operations and crisis-related spending and programmes. 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. A Cross Country Analysis. These data capture the broad trends in the South African economy. 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. ", Stan Du Plessis & Ben Smit & Federico Sturzenegger, 2007. It also allows you to accept potential citations to this item that we are uncertain about. ", Jean Boivin & Michael T. Kiley & Frederic S. Mishkin, 2010. We also have intangible variables, such as confidence indices, and survey variables. Such steps will further reduce existing constraints on monetary policy and its transmission to lending. Each of these steps make more capital available to households and firms. As inflation still remains within the upper portion of the 3–6% target range, appropriate mix of supply and demand side policies could be explored alongside monetary policy to reduce inflationary pressures. Latest Monetary policy rates At the meeting, Mr Emefiele said the committee considered three options before resolving to leave the lending rate, also known as the monetary policy … In the 1970s and 1980s, the economies of several developed and developing countries witnessed much volatility in output growth, inflation and other macroeconomic variables. General contact details of provider: http://edirc.repec.org/data/cbtnsus.html . The decision was unanimous. ". 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. Our analyses are based on a factor-augmented vector autoregression with time-varying coefficients and stochastic volatility (TVP-FAVAR), which allows us to simultaneously analyze the changing impulse responses of a set of 177 macroeconomic variables covering the inflation, real activity, asset prices and monetary series. 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, How Has the Monetary Transmission Mechanism Evolved Over Time? We also in addition identify demand and supply shocks. Despite this rise in country risk, the Committee notes that the more prolonged lockdown and slower recovery creates downside risk to inflation and allows further space for monetary policy to respond to the virus-induced demand shock to the economy. Has Monetary Policy become more Efficient? ", Anastasios Evgenidis & Costas Siriopoulos, 2015. ", Ben Bernanke & Mark Gertler & Simon Gilchrist, 1994. ", Rangan Gupta & Alain Kabundi & Mampho Modise, 2010. 2 Department of ). They are also invaluable to increase a country’s readiness to respond to a crisis ", James H. Stock & Mark W. Watson, 2003. See general information about how to correct material in RePEc. 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. 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. If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form . 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. What does this mean to the retail industry? If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. ", Bianchi, Francesco & Mumtaz, Haroon & Surico, Paolo, 2009. ", Mumtaz, Haroon & Zabczyk, Pawel & Ellis, Colin, 2011. A time-varying FAVAR model for the UK transmission mechanism, Reconsidering the business cycle and stabilisation policies in South Africa. The country’s monetary authorities, however, have struggled to … Current indications from the World health Organisation are that the pandemic is unlikely to end quickly, with shorter, less virulent waves hitting over time. ", Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. 228 Monetary policy operating procedures in South Africa E. J. van der Merwe Introduction The new socio-political structure in South Africa led to a need to reintegrate the economy into a rapidly changing global financial environment 4% in 2022. 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. We also find government borrowing as an important underlying source of asymmetries in the response of macroeconomic fundamentals to monetary policy shocks in South Africa. Copyright 2020 Government of South Africa. The next statement of the Monetary Policy Committee will be released on 21 May 2020. For our forecast, the Brent crude oil price is expected to average $42 per barrel in 2020 and $45 per barrel in 2021, very close to the March forecast. South Africa Looks Toward Inclusive Recovery to Stabilize Debt, Boost Growth In a conversation with IMF Country Focus, the Director-General of South Africa’s National Treasury Dondo Mogajane explains how the government has responded to the COVID-19 crisis, how IMF financing will help to stabilize the economy, and strategies for addressing debt and spurring growth. The Bank’ s headline consumer price inflation forecast averages 3.6% for 2020,  4.5% for 2021, and 4. 2020 Monetary Policy and the Coronavirus 18 June 2020 - The South African Reserve Bank, the coronavirus shock, and ‘the age of magic money’ - a lecture presented by Governor Lesetja Kganyago. ", Thomas Lubik & Frank Schorfheide, 2006. ", Paul Bennett & Richard Peach & Stavros Peristiani, 1998. The impacts will be particularly severe for small businesses, and individuals with in! Imf and other forecasters expect a growth recovery to begin in 2021 Simon 1994... 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