Central bank communication: a survey and content analysis of the South African Reserve Bank’s monetary policy committee statements

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The South African Reserve Bank (SARB), South Africa’s central bank, adopted inflation targeting in 2000. In 2000, the SARB adopted flexible inflation targeting as a monetary regime and in doing so, set its inflation target at 3%–6% for the CPIX (Coco and Viegi, 2020). However, for inflation targeting to prove effective, it remains vital that the monetary institution in question contains the expectations of the private sector primarily in line with the expectations channel of the transmission (Svensson, 1999). To this end, the role of effective communication has in the past two decades proved vital in monetary policy. This PhD dissertation seeks to evaluate the SARB’s communication strategy, with particular emphasis on its Monetary Policy Committee (MPC) statements, and thereafter appraise its interaction with the media and other market agents. This evaluation takes the shape of three studies, with particular focus firstly on SARB’s MPC statements over the past twenty-one years. This study assesses whether there has been more clarity in SARB’s communication over the past twenty-one years by relying on the Flesch and Flesch-Kincaid methods, which are widely accepted in central bank communication literature. In evaluating SARB’s communications and upon surveying the data, this section offers empirical evidence about SARB’s MPC meeting statements spanning more than two decades, clearly exhibiting its evolution. The second facet of the study examines whether the SARB’s MPC communications between 2010 and 2021 triggered causality in the subsequent news reports from the Mail & Guardian newspaper in South Africa. The study examines whether SARB’s post-MPC statements’ readability was reciprocated in the subsequent Mail & Guardian newspaper articles. Relying on the Flesch-Kincaid Grade Level score and Flesch Reading Ease Score methodology to survey both SARB’s MPC statements and the corresponding Mail & Guardian newspaper articles, a computation is created that is subsequently used to examine Granger causality.
A thesis submitted in fulfilment of the requirement for the degree Doctor of Philosophy to the Faculty of Commerce, Law and Management, Wits Business School, University of the Witwatersrand, Johannesburg, 2022
South African Reserve Bank (SARB), Central bank communication