Causality Analysis of South Africa Reserve Bank’s Monetary Policy Statements and Communication


  • Arnold Segawa University of the Witwatersrand



central bank communication, South African Reserve Bank, Monetary Policy Committee statements, Flesch-Kincaid Grade Level score, Granger causality, Flesch Reading Ease Score


This paper inspects whether the South Africa Reserve Bank’s (SARB) Monetary Policy Committee (MPC) statements trigger have a causality with newspaper reports from the Mail and Guardian between 2010 and 2021. The study examines whether SARB’s post MPC statements’ readability is reciprocated in the subsequent Mail and Guardian newspaper articles. Using the Flesch Reading Ease Score and Flesch-Kincaid Grade Level score as the methodology, there is a systematic unpacking of both SARB’s MPC statements and newspaper reports from the Mail and Guardian which yield a dataset which is subsequently used to create a computation. This computation is then used to examine whether SARB’s MPC statements Granger cause the subsequent Mail and Guardian newspaper articles. Resultantly, the results show that there is no Granger causality between the SARB’s MPC statements and the Mail and Guardian’s Flesch Reading Ease Score and Flesch-Kincaid Grade Level score.


Berger, H., Ehrmann, M., & Fratzscher, M. (2011). Monetary policy in the media. London: CEPR.

Bernanke, B. (2010). Monetary Policy Objectives and Tools in a Low-Inflation Environment, Speech at the Federal Reserve Bank of Boston (Revisiting Monetary Policy in a Low-Inflation Environment Conference).

Blinder, A., & Wyplosz, C. (2004). Central Bank Talk: Committee Structure and Communication Policy, prepared for the session on “Central Bank Communication” at the ASSA meetings. Philadelphia, January 9th.

Blinder, A., Ehrmann, M., Fratzscher, M., De Haan, J., & Jansen, D. (2008). Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence. Journal of Economic Literature, 46(4), 910-945. DOI: 10.1257/jel.46.4.910

Brand, C., Buncic, D., & Turunen, J. (2010). The impact of ECB monetary policy decisions and communication on the yield curve. Journal of the European Economic Association, 8(6), 1266-1298. Retrieved July 15, 2021, from, C. and Nechio, F. (2014). Do people understand monetary policy? Journal of Monetary Economics, 66, pp. 108–23.

Cukierman, A. (2009). The Limits of Transparency. Economic Notes, 38: 1-37.

Demiralp, S., Kara, H., & Özlü, P. (2012). Monetary policy communication in turkey. European Journal of Political Economy, 28(4), 540–556.

Doms, M., & Morin, N. J. (2004). Consumer Sentiment, the Economy, and the News Media. Macroeconomics eJournal.

du Rand, G., Erasmus, R., Hollander, H., Reid, M., & van Lill, D. (2021). The evolution of central bank communication as experienced by the south africa reserve bank. Economic History of Developing Regions, 36(2), 282–312.

Filardo, A., Hubert, P., & Rungcharoenkitkul. (2019). The reaction function channel of monetary policy and the financial cycle, No 816, BIS Working Papers, Bank for International Settlements

Flesch, R. (1948) A new readability yardstick Journal of Applied Psychology 32:221–233.

Flesch, R. (1979). How to write plain English: A book for lawyers and consumers. New York: Harper & Row.

Fracasso, A., Genberg, H., & Wyplosz, C. (2003). How do central banks write? An evaluation of inflation reports by inflation targeting central banks International Center for Monetary and Banking Studies, Centre for Economic Policy Research (Great Britain), & Norges bank. (Ser. Geneva reports on the world economy. special report, 2). International Center for Monetary and Banking Studies.

Graesser, A. C., McNamara, D. S., & Kulikowich, J. M. (2011). Coh-Metrix: Providing Multilevel Analyses of Text Characteristics. Educational Researcher, 40(5), 223–234.

Granger, C. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37(3), 424-438. doi:10.2307/1912791

Gentzkow, M., & Shapiro, J. M. (2006a). Media bias and reputation. The Journal of Political Economy, 114(2), 280–316.

Gentzkow, M., & Shapiro, J. M. (2006b). What Drives Media Slant? Evidence From U.S. Daily Newspapers. Econometrica, 78: 35-71.

Hayo, B., Kutan, A., & Neuenkirch, M. (2008), Communicating with Many Tongues: FOMC Speeches, Media Coverage, and U.S. Financial Market Reaction, MAGKS Joint Discussion Paper Series in Economics 08–2008.

Hensel, H. (2014). Validation of the Flesch-Kincaid Grade Level within the Dutch educational system. Available from:,%20T.N.C.A.%20-%20s0170860%20(verslag).pdf

Issing, O. (2005). Communication, transparency, accountability: monetary policy in the twenty-first century. Federal Reserve Bank of St. Louis Review, Vol. 87, No. 2, Part 1, pp. 65-83, this article is a revised english translation of the thünen lecture, given at the Annual Congress of the Verein für Socialpolitik, 29 September 2004, Dresden.

Jansen, D. (2011). Does the Clarity of Central Bank Communication Affect Volatility in Financial Markets? Evidence from Humphrey-Hawkins Testimonies. Contemporary Economic Policy 29 (4): 494–509. doi:10.1111/coep.2011.29.issue-4

Kabundi, A., Schaling, E., & Some, M. (2015). Monetary policy and heterogeneous inflation expectations in South Africa. Economic Modelling, 45, 109-117.

Katz, E., Lazarsfeld, P. F., & Columbia University. Bureau of Applied Social Research. (1955). Personal influence: the part played by people in the flow of mass communications (Ser. Foundations of communications research). Free Press

Kincaid J. P., Fishburne R. P., Rogers R. L., & Chissom B.S. (1975). Derivation of New Readability Formulas (Automated Readability Index, Fog Count and Flesch Reading Ease Formula) for Navy Enlisted Personnel Naval Technical Training Command Millington TN Research Branch. RBR-8-75.

Luangaram, P., & Wongwachara, W. (2017). More Than Words: A Textual Analysis of Monetary Policy Communication, PIER Discussion Papers, Puey Ungphakorn Institute for Economic Research,

McCombs M. E., & Shaw, D.L. (1972). The agenda-Setting Function of Mass Media. Public Opinion

Quarterly, Vol.36(2): 176-187

Mishkin, F. S. (2004). Can Inflation Targeting Work in Emerging Market Countries? National Bureau of Economic Research, Inc, NBER Working Papers. 10.7551/mitpress/9780262182669.003.0005.

Montes, G. C., & Nicolay R. T. F. (2017). Does clarity of central bank communication affect credibility? Evidences considering governor-specific effects, Applied Economics, 49:32, 3163-3180, DOI: 10.1080/00036846.2016.1254346

Neuenkirch, M. (2009). Studies on us and Canadian central bank communication (Unpublished doctoral dissertation).

Picault, M., Pinter, J., & Renault, T. (2020). Media Sentiment on Monetary Policy: Determinants and Relevance for Inflation Expectations.

Reid, M. (2011a). Communication as a Strategic Monetary Policy Tool: An Evaluation of the Effectiveness of the South African Reserve Bank’s Communication. Stellenbosch University, Department of Economics. (Unpublished doctoral dissertation)

Reid, M. (2011b). Talking to the Inattentive Public: How the media transforms the Reserve Bank’s communications. Stellenbosch University, Department of Economics: 19/2011.

Reid, M., Bergman, Z., Plessis, S. D., Bergman, M. M., & Siklos, P. (2019). Inflation and Monetary Policy: What South African Newspapers Report in an Era of Policy Transparency. Journal of Economic Issues, 54, 3, 732-754.

Segawa, A. (2018). Media coverage of South Africa Reserve Bank Monetary policy committee work: A case study of CNBC Africa 2014-2017. University of the Witwatersrand, Department Journalism. (Masters dissertation).

South African Reserve Bank. (2006). Communications Policy. Pretoria: South African Reserve Bank.

Svensson, L. E. O. (1999). Inflation Targeting as a Monetary Policy Rule. Journal of Monetary Economics, 43, 3, 607-654.

Svensson, L. E. O. (2010). Inflation Targeting (2010). NBER Working Paper No. w16654, Available at SSRN:




How to Cite

Segawa, A. (2021). Causality Analysis of South Africa Reserve Bank’s Monetary Policy Statements and Communication. International Journal of Finance & Banking Studies (2147-4486), 10(4), 55–74.