of volatility. since the time of the previous agm the rand depreciated on a trade - weighted basis by about 8, 5 per cent. however, it traded in a wide range of between r12, 70 and r16, 90 against the us dollar. this volatility was not only externally generated : domestic developments, including the fallout from the political events in december last year ; the risks of a sovereign ratings downgrade ; the wide current account deficit and the declining growth were important contributors to these trends. whereas a downgrade was avoided in june, similar concerns are likely to re - emerge later in the year when the next reviews are scheduled. the domestic economy was characterised by a persistent slowdown during the past year, driven by weak consumption and investment expenditure growth. the agricultural sector was particularly hard hit by the worsening drought. the economy grew by 1, 3 per cent in 2015, and the outlook for the economy remains constrained, particularly following the contraction of 1, 2 per cent experienced in the first quarter of this year. nevertheless we expect that to have been the low point of the current growth cycle. the bank forecasts economic growth of zero per cent in 2016, rising to 1, 1 per cent, and 1, 5 per cent in the coming two years. these growth rates are insufficient to make significant inroads into the deteriorating unemployment numbers. the direct effect of the brexit decision on domestic growth is expected to be marginal in the short term, while the longer term impacts will depend on the outcome of the negotiations and the impact on global growth generally. inflation averaged 4, 6 per cent in 2015, and was within the target range in each month of the year, reaching a low point of 3, 9 per cent in february. a large part of this favourable trend was driven by a temporary respite from lower international oil prices. since january 2016, however, inflation has breached the upper end of the target range, and is expected to remain above target until the third quarter of next year. in the absence of domestic demand pressures, these adverse inflation trends have been driven primarily by supply side factors. these include the exchange rate, drought - induced food price increases, and a reversal of the favourable oil price shock. in response to these inflation pressures, the monetary policy committee continued with its moderate tightening cycle that began in january 2014. since july 2015 the repo rate increased by a cumulative 125 basis point, to 7, 0 per cent in march

transition process as one which entails multiple and carefully sequenced steps, beginning with the stabilisation of the jibar to secure the transition period. this is followed by the establishment of new rates and foundations for new markets, and then by the adoption of those rates before full transition takes place. thus far, the work of the mpg has largely focused on strengthening the current jibar framework in line with the first step, as well as on finding new alternatives. this work has now been completed and the project is proceeding to the next phase which entails thinking about the most suitable transition approach to be adopted by south africa. as its work is advancing, the mpg intends to keep all stakeholders informed of its progress and the next steps, and this is why we are here today. thus, the purpose of today ’ s mpg forum is twofold : page 3 of 4 first, to report on and inform stakeholders of key decisions, considerations and recommendations made by the mpg in relation to the reform of the jibar and the choice of an alternative overnight reference rate for south africa ; and second, to outline the envisioned transition process to an overnight rate as a key reference rate for the south african financial market. as we engage in this conversation, i wish to reiterate the position the sarb has taken regarding the future of the jibar. earlier, i alluded to deficiencies in the current jibar framework, which have led to the sarb taking a decision to reform the jibar. the unsecured reference rate work stream and later the jibar task team have done commendable work in this regard, to ensure that the jibar framework is strengthened to enhance its robustness. however, changes to the jibar framework should not be understood as implying that the jibar will continue indefinitely. the sarb, as the benchmark administrator of the jibar, has decided that the jibar will cease at some future point. the enhanced framework will remain in place for a limited time, after which south africa will transition to alternative reference rates. in the new interest rate dispensation, we expect that the key reference rate will be an overnight near risk - free rate, which may or may not co - exist alongside a risk - based term rate. at this point i would like to hand over to my colleagues to share with you the decisions that have been taken thus far, their motivations as well as the trade - offs we have had to manage leading up to