Monetary Policy in South Africa

Monetary policy in emerging countries is a difficult balancing act between supporting economic transformation, maintaining a sound macroeconomic environment, and reacting to internal and external shocks. This chapter reviews monetary policy in South Africa focusing on the structural constraints that affect the efficiency of policy. The main argument is that future of monetary policy depends on how the country deals with the underlying structural constraints. The country needs to return to growth and build strong resilience in its economic and social institutions. Monetary policy can help in the transition process if the policy is strongly anchored to long-term stability objectives and the Central Bank remains a credibly independent institution.