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Inflation targeting was instituted in South Africa in the early 2000s and the South African Reserve Bank is tasked with keeping Consumer Price Inflation (CPI) between three and six percent. “While our key trading partners are around the 3% mark, South Africa tends to ride higher at 5.5% or 6% so the objective is to try and work CPI down to around 4.5%,” explains Annabel.

"If you get inflation targeting right, you get price stability and certainty."

In South Africa, inflation is driven by the supply side (from state-administered prices, electricity and water tariffs etc). “The demand-led inflation is extremely weak due to the recession,” she says.

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How inflation targeting works
We look at the impact of inflation targeting on interest rates and the economy, and the Reserve Bank's role in controlling it.

About the author

Annabel Bishop

Annabel Bishop

Chief Economist of Investec Ltd

Annabel holds an MCom Cum Laude (Economics and econometrics) and has worked in the macroeconomic, risk, financial market and econometric fields, among others, for around 25 years. Working in the economic field at Investec, Annabel heads up a team, which focusses on the macroeconomic, financial market and global impact on the domestic environment. She authors a wide range of in-house and external articles published both abroad and in South Africa.

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