The South African Reserve Bank's (SARB) Monetary Policy Committee announced a shift in its preferred inflation target in July 2017. Before the third quarter of 2017, the committee maintained an inflation targeting range of 3–6%. However, from that point onward, the focus shifted to the midpoint of this range, setting 4.5% as the preferred target.
A study conducted using a Bayesian vector autoregression-based counterfactual exercise examined the implications of this change. The findings suggest that emphasizing a 4.5% target helped reduce prices and inflation expectations without adversely affecting real output and employment levels. This outcome was attributed to a decrease in the South African–United States long-term interest rate spread, effectively reducing risk, and positively influencing asset prices.