a peak of 11, 3 per cent in october 2002 to below the upper boundary of the inflation target from september 2003. in october 2003 it even receded to below the mid - point of the target range when it reached 4, 4 per cent. this achievement was underpinned by the sustained maintenance of prudent monetary and fiscal policies together with the recovery in the international exchange value of the rand and a moderation in food price increases. as the inflation outlook improved, the monetary policy stance was adjusted on four occasions in 2003. the first reduction in the repo rate was only made in june 2003, but there were already clear signs that the inflation rate was moving towards the inflation target at the march meeting of the monetary policy committee. at the time of that meeting it was felt that upside risks limited any possible actions that the mpc could take. in particular, the commencement of the war in iraq on the first day of the meeting had an important effect on the committee's decision. as the uncertainties about the inflation outlook dissipated and it became increasingly apparent that most factors favoured the attainment of the inflation target in the next two years, the mpc started to lower interest rates. the repo rate was cut by 150 basis points in june, by 100 basis points in august and september, and again by 150 basis points in october. all in all, a total reduction of 500 basis points in a period of only five months. this was indeed an aggressive lowering of interest rates. nominal rates are at levels last seen in the 1980s, but the difference is that the current and expected inflation rates are significantly lower than those observed in the 1980s. although international and domestic economic conditions have allowed the mpc to reduce short - term interest rates in an aggressive manner, the overriding objective of the reserve bank remains the attainment of the inflation target. achieving low inflation is not an end in itself. it is important because it is a prerequisite for sustainable high economic growth and employment creation. the current and more importantly the expected state of the domestic economy will always carry weight in the determination of monetary policy. 5. the exchange rate of the rand of all the recent economic developments, the behaviour of the external value of the rand has attracted the most attention. the exchange rate of the rand has been very volatile during the past few years. after the nominal effective exchange rate of the rand had declined by 13 per cent in 2000 and 34 per cent in 2001, it increased by 24 per cent in

. accessing data is perhaps the easy part. the first hurdle is deciding how the outlook for domestic and global economy impacts on future inflation. to clear this hurdle requires the team to interpret current economic conditions and events, and to apply judgement about the likely future path of the economy. there are many factors that the team must consider, and they are often moving in different directions, making judgment on how they will affect future inflation that much more difficult. at the end of it all, committees rely on judgement in making the call whether to cut, increase, or keep interest rates unchanged. monetary policy decisions in the sarb are made by the monetary policy committee ( mpc ). the mpc currently comprises six members, being the governor, the three deputy governors, and two other senior officials of the sarb. every decision of the mpc is an outcome of in - depth discussion and debate. even a'no change'decision is a policy decision. i should also note that the monetary policy decision is not a one - off event ; it is a continuous process which culminates in the mpc meeting where decisions are finally taken. we are constantly talking to each other, discussing what we see and how we interpret what we see. there is a sizeable literature on the relative efficiency of committee - based decision making. a committee tends to pool information and ideas from a group comprising different skills and views, and it also provides insurance against extreme preferences and outcomes. so, there is an additional benefit that participation in the mpc schools challenge potentially offers learners. and that is that those learners get an opportunity to develop or put their social skills into practice. by social skills i mean the ability to interact with fellow human beings. literature shows that the ability to interact with fellow workers, successfully working as a team remains among the most important skills in the modern economy. this is because technology has yet to successfully simulate human interaction. the ability to listen to the views of your colleagues, question or debate the issues they raise and attempt to persuade them otherwise has a broad societal benefit, way beyond application in policymaking. in that sense, the ability to engage with the ideas of fellow workers and collaborate with them will, for a long time to come, remain one of the prized skills by employers. the mpc schools challenge is therefore a contribution by the sa reserve bank towards improving the understanding by young south africans of how the economy works, why high inflation is bad for an economy and how the monetary policy committee makes