Significant success has been achieved with the monetary policy model of the South African Reserve Bank during the past decade. However, important structural changes in the South African financial system in recent years have altered the transmission mechanism and weakened the more stable relationships that previously existed between changes in the money supply and in bank credit extension, on the one hand, and in nominal spending on goods and services and in prices on the other hand. Changes in the monetary aggregates have for the time being lost some of their usefulness as the most important indicators of possible future trends in inflation, and therefore also as an anchor for monetary policy decisions. The Reserve Bank has tentatively assumed a goal of maintaining inflation at a level that would be more or less in line with the average rate of inflation in the economies of South Africa’s major trading partners and international competitors. In the current international inflation environment this translates into an inflation rate of between 1 and 5 per cent per annum. The Governor of the South African Reserve Bank has, however, stated that South Africa could under ideal circumstances gradually move towards targeting inflation directly: “In the [altered] situation, South Africa has to consider more seriously the introduction of inflation targets as an anchor for monetary policy purposes” (see Stals 1999). The paper briefly reviews the general prerequisites that still need to be met before a fully-fledged inflation targeting framework could be successfully introduced in South Africa and more specifically, the elements of inflation targeting that could possibly be adopted successfully beforehand. In the first part of the case study, recent monetary policy developments and new operational procedures are discussed. The scope for adopting inflation targeting in South Africa in the near future, the applicability of inflation targeting and possible conflicts with other policy objectives will be addressed within the context of what is currently regarded as being the most suitable approach towards inflation targeting in developing countries. The potential advantages and concerns in adopting an inflation targeting monetary policy framework will then be discussed. Finally, the necessary prerequisites for the successful implementation of inflation targeting in South Africa will be identified and the elements of inflation targeting that could be adopted beforehand will be discussed