, suggested to us back in 2006. they showed us how a more export - led growth strategy needs to be predicated on a more competitive page 9 of 11 exchange rate achieved by running a fiscal surplus to create space for lower interest rates, and supplemented by an effective inflation - targeting framework. 4 in fact, under inflation targeting, excessive exchange rate appreciation has been rare and short - lived. these discrete periods occurred when capital flowed in as a result of high commodity prices, sustained public borrowing, and low yields in advanced economies – not because of inflation targeting. all else being equal, the inflationtargeting framework has lowered inflation and rates, reducing the pull on hot money in recent times. in fact, a fundamental objective of inflation targeting has always been to achieve a more competitive exchange rate, and the best way to achieve this is to get inflation to be permanently low. conclusion the constitution recognises and expresses the public good which is price stability because it helps societies to achieve balanced and sustainable economic growth. it is necessary but not sufficient. like the mandate, central bank independence is also not a static, ivory - tower concept. it is a living and breathing idea. it is an idea that is practical. it gives life to the mandate set out for the sarb by the constitution. this independence means that the sarb can make the case for how best to achieve that goal, in consultation with government and with full transparency to the general public. as an institution, we have worked with government to identify the inflationtargeting framework as the best way of achieving the mandate, for all the reasons i have set out today. we believe that the case for the existing framework is very strong. we have achieved a historically low rate of inflation and, as a direct consequence of this, historically low 4 for the panel ’ s recommendations, please see ricardo hausmann ’ s final recommendations of the international panel on growth, available at http : / / www. treasury. gov. za / comm _ media / press / 2008 / final % 20recommendations % 20of % 20the % 20i nternational % 20panel. pdf, especially pages 6 and 12 - 13. page 10 of 11 interest rates. of course we would like to improve on this track record and edge both inflation and interest rates lower on a sustainable basis. this is the most important contribution that monetary policy can make to full employment, economic growth and the well - being of our society. thank

, he argues, the extra informational content of central bank forecasts is zero, and that pressures to push central bis central bankers ’ speeches banks in the direction of publishing their interest rate forecasts are, in his view, “ retrograde ”. he argues further that the move by the fomc to publish individual ( but not attributed ) views of when interest rates should change reveal such wide divergences as to be unhelpful. the reality is that the further we go into the future, the less confident we can be about our future actions. i do not know what the world will look like in a years ’ time. it follows that i cannot be certain what the domestic economy and therefore domestic interest rates will be. i could give you my best guess, or a forecast based on all available information and reasonable assumptions, but this is likely to be wrong. monetary policy operates in an uncertain environment all the time. we are constrained by the unknown, in the same way that the rest of the market is, and unfortunately central bankers are not bestowed with superior foresight. yet we take decisions looking into this unknown future, while trying to see through the prevailing noise and uncertainties. and in acting in this way we also influence, however slightly, that future. at best, as goodhart suggests, central banks can focus on a range of possible outcomes ( not focus on point forecasts ), on potentially varying scenarios and on the need for flexibility, not pre - commitment, to respond as the unknowable future unfolds. we are treading carefully in this respect, as signaling is difficult because of its conditional nature. however there have been times when we have given direction. for example, at the time of the may mpc meeting, the market appeared to be focused on the timing of the next interest rate increase, and we felt it was important to signal that the risks to the interest rate outlook were not only on the upside, and that should the global environment deteriorate significantly, the mpc would be prepared to respond by reducing the policy rate. hence our statement that the mpc stood ready to move in either direction, as appropriate. in other words we were communicating that should inflation move out of the target range on a sustained basis, the mpc would be prepared to tighten policy, but in the event of a severe global downturn, monetary policy could in fact be eased. judging by the response of the fras at that time to our signal