Monetary policy in South Africa, 2007–21

Honohan, Patrick; Orphanides, Athanasios

doi:10.35188/unu-wider/2022/160-0

Cited by 1 publication

(1 citation statement)

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“…In 1989, the South African Reserve Bank Act 90 of 1989 was enacted, and it replaced the SARB Act 1944 (South African Reserve Bank, 2011). The main objective of the Act was to protect the internal and external value of the rand (Honohan and Orphanides, 2022). In 2000, South Africa became the 13th country to adopt an inflation-targeting monetary policy framework (Kumo, 2015).…”

Section: Overview Monetary Policy and Residential Property Pricesmentioning

confidence: 99%

Short-run dynamics and long-run effects of monetary policy on residential property prices in South Africa

Mwanyepedza,

Mishi

2023

IJHMA

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Purpose The study aims to estimate the short- and long-run effects of monetary policy on residential property prices in South Africa. Over the past decades, there has been a monetary policy shift, from targeting money supply and exchange rate to inflation. The shifts have affected residential property market dynamics. Design/methodology/approach The Johansen cointegration approach was used to estimate the effects of changes in monetary policy proxies on residential property prices using quarterly data from 1980 to 2022. Findings Mortgage finance and economic growth have a significant positive long-run effect on residential property prices. The consumer price index, the inflation targeting framework, interest rates and exchange rates have a significant negative long-run effect on residential property prices. The Granger causality test has depicted that exchange rate significantly influences residential property prices in the short run, and interest rates, inflation targeting framework, gross domestic product, money supply consumer price index and exchange rate can quickly return to equilibrium when they are in disequilibrium. Originality/value There are limited arguments whether the inflation targeting monetary policy framework in South Africa has prevented residential property market boom and bust scenarios. The study has found that the implementation of inflation targeting framework has successfully reduced booms in residential property prices in South Africa.

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Section: Overview Monetary Policy and Residential Property Pricesmentioning

confidence: 99%