, suggesting little needed change in what is a beneficial level of international financial integration. alongside a current account surplus from a robust terms of trade, relatively low levels of external and foreign currencydenominated debt, the currency played its role as an ‘ automatic stabiliser ’ without triggering financial concerns. over the ten - year period running up to may 2022, when inflation breached the upper end of the target, 83 % of the time monthly inflation was within the target band. implications for policy going forward with negative real policy rates and the accompanying commodity price boom, a large part of our recovery was demand driven. the terms of trade, fiscal expansion and the lower borrowing costs were, nonetheless, offset in part by higher household and corporate saving. 18 alongside very low potential growth, a function of energy constraints primarily, the output gap has been much smaller than expected and measured to be zero in recent quarters. the weak growth performance entails further risks in a world where globalisation is retreating, with real yields propped up by high borrowing demands and insufficient efforts to get growth moving. south africa and other emerging economies need to work harder to attract capital. this is even more true in a world in which neutral real rates in advanced economies shift higher, a prospect that looks increasingly likely. in such conditions, emerging economies run a serious risk of becoming permanently more prone to currency depreciation and higher inflation. on its own, this prospect pulls up our neutral rates, and can only be combatted with more orthodox policy measures. clearly, in south africa, structural reforms and key deregulations of transport and electricity are critical. but so too is a shift in fiscal policy back to predictable, transparent rules. with the rise in debt created by our efforts to confront weakening growth and failures of state enterprises, there is little chance of improving credit quality without new rules and more strategic use of macroeconomic policy. a major benefit to fiscal policy and to stronger growth would be the implementation of a revised inflation target in south africa. a lower target, sitting at 3 %, would help dampen exchange rate volatility and sovereign risk, reduce the potential for upward drift in the real exchange rate, and materially lower debt service costs, primarily for the now over - indebted public sector. 19 offsetting effects occurred in respect to volumes of exports and imports, even as price effects were strongly positive. “ monetary policy in south africa : 2007 – 21 ”, patrick honohan and athanasios orphanides

adding another channel for inflation pressures. ample cash transfers allowed “ growing challenge of empty container returns adds to us supply chain disruption ”, journal of commerce, august 18, 2022 by march 2020, the us fed funds rate had been lowered to a range of 0 – 0. 25 % ( a cumulative 150 basis points reduction since the start of that year ). the bank of england similarly lowered its policy rate by 65 basis points to 0. 1 % over the same period. meanwhile, the european central bank and bank of japan maintained their policy rates at their long - standing levels of 0 % and - 10 % respectively. interest rate adjustments were also accompanied by large asset purchases. economies implemented additional supplementary relief measures throughout 2021 : the eu adopted a eur672. 5 bn recovery and resilience facility ( rrf ) in february 2021 ; and the us, a usd 1. 9 tr covid relief bill in march 2021. japan approved a usd490 bn stimulus package in november 2021. the gfc did not constrain supply in the same way as the pandemic, or for so long, so production could efficiently respond to sustained demand where it was offered. many workers to ‘ pick and choose ’ from offers, while hybrid work changed the geographical distribution of labour supply. at a time when shifting spending patterns altered the demand for labour, mismatches grew, putting upward pressure on wages. perhaps the biggest single problem had to do with how all this stimulus was positioned as a ‘ new ’ policy that would be kept in place for an extended time. i would characterise this as an adverse, unintended consequence of policy commitment and credibility. providing more certainty to markets than was possible, we central bankers positioned shifts in stance too often and fully as policy change, at the wrong time. when we overdraw these changes, our ability to change direction is compromised. when the data further puts our commitment into question, we get sharply higher uncertainty and volatility. imbalances persist as we stand now, some of the supply / demand mismatches i just described have abated. natural gas prices are back near pre - war levels. global prices of food commodities have declined and shipping costs normalised. supply bottlenecks have eased, and delivery lags are again in line with historical norms. yet not all imbalances have been resolved. three years since the pandemic started, labour markets remain tight, with unusually high levels of vacancies