But researchers who have studied the Bundesbank's policies of that period have concluded that it likely responded to deviations from target of both expected inflation and output growth.”  8  In South Africa, we estimate this neutral rate to be 7% over time,11 of which 4.5% is compensation for inflation and 2.5% is the so-called neutral real interest rate ‒ the rate excluding inflation ‒ which economists abbreviate as r-star.
In turn, that 2.5% is made up of half a percentage point which reflects the global real rate, which we derive from the longer-run real policy rate of the US, the euro area and Japan, plus 2 percentage points for the South African risk premium. As with potential growth, we cannot be sure that the neutral rate is exactly 7%.