Inflation targeting anchors inflation expectations, which are not within the sphere of control of the authorities, but can only be influenced over time by consistent policy. As public distrust of inflation figures will feed through to inflation expectations, this paper highlights pilot studies measuring the credibility of inflation in terms of an inflation credibility barometer. Despite initial discouraging results, the conclusion is that knowledge and information improve the credibility of inflation, but only one inflation rate (ideally the one used for inflation targeting purposes) should be communicated. Moreover, the rate used for targeting purposes should be specified with ease of communication in mind.
This study investigates the asymmetric and time-varying causalities between
inflation and inflation uncertainty in South Africa within a conditional
Gaussian Markov switching vector autoregressive (MS-VAR)
model framework. ...
As inflation credibility in South Africa records low readings when measured in terms of inflation
credibility barometers, this note aims at assessing whether actual price movements provide any
grounds for low inflation ...
We propose a comparison between atheoretical and theoretical models in forecasting the
inflation rate for an inflation-targeting country such as South Africa. In a pseudo real-time
environment, our results show that for ...