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An Overview of the Repo Rate in an Inflation Targeting Economy

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  • Gideon O. Fadiran
  • Adebisi Edun

Abstract

This paper compares the use of repo rate in South Africa during the pre‐repo and repo system by trending and comparing the interest rate fluctuations between two selected periods of 1990–1998 and 1998–2010. Using a structural vector autoregressive (SVAR) econometric method to determine the relationship between the repo rate and other selected key macroeconomic variables in South Africa, an improved monetary efficiency was found during the repo period, which can be attributed to the use of an inflation‐targeting framework. This is important as it provides a guide to policymakers on how effective the current monetary tool is, and how efficient the South African Reserve Bank (SARB) is in influencing the interbank rate, retail rates and inflation during selective periods.

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  • Gideon O. Fadiran & Adebisi Edun, 2013. "An Overview of the Repo Rate in an Inflation Targeting Economy," African Development Review, African Development Bank, vol. 25(4), pages 621-635, December.
    • Handle: RePEc:bla:afrdev:v:25:y:2013:i:4:p:621-635
    DOI: 10.1111/1467-8268.12056
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    1. Ruthira Naraidoo & Rangan Gupta, 2009. "Modelling monetary policy in South Africa: Focus on inflation targeting era using a simple learning rule," Working Papers 200904, University of Pretoria, Department of Economics.
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    7. C De Angelis & Mj Aziakpono & A Pierre Faure, 2005. "The Transmission Of Monetary Policy Under The Repo System In South Africa: An Empirical Analysis♣," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 657-673, December.
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    Cited by:

    1. Andrew Phiri, 2018. "Has the South African Reserve Bank responded to equity returns since the sub-prime crisis? An asymmetric convergence approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(3), pages 205-225.
    2. Ken Miyajima, 2020. "Exchange rate volatility and pass‐through to inflation in South Africa," African Development Review, African Development Bank, vol. 32(3), pages 404-418, September.
    3. Phiri, Andrew, 2017. "Has the South African Reserve Bank responded to equity prices since the sub-prime crisis? An asymmetric convergence approach," MPRA Paper 76542, University Library of Munich, Germany.
    4. Seydou Coulibaly, 2021. "COVID‐19 policy responses, inflation and spillover effects in the West African Economic and Monetary Union," African Development Review, African Development Bank, vol. 33(S1), pages 139-151, April.

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