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Since September 2017, the SARB has published a projection of the policy rate (repo) alongside its Monetary Policy statements. We construct measures of monetary policy surprises based on various measures of market expectations of the future level of the policy rate in South Africa. We find that there have been fewer meaningful monetary policy surprises since the publication of the projected
policy path. We then test whether this communication has improved how the market incorporates expectations of the policy rate into future interest rates. We find that communication of the SARB projections has improved the market’s response to this information. However, policy guidance through the publication of the policy path still plays a relatively limited role in guiding market pricing. We argue there is still room for improvement in the SARB’s monetary policy
communication by better clarifying the conditionalities associated with the SARB’s projections of its future policy path.