It is important to emphasise that governments and not central banks should ideally decide on the target and the central bank should implement such a framework. After using different monetary policy frameworks over time, an official inflation target was specified for the South African Reserve Bank for the first time in February 2000 by the government.
Notwithstanding the impact of considerable exchange rate volatility, this monetary policy framework is serving South Africa well. In deciding on monetary policy, the SA Reserve Bank emphasises the inflation rate. Despite acting with due regard to the short-term impact of monetary policy on production and employment, the SA Reserve Bank keeps its focus firmly on inflation.