useful forum for the official sector to coordinate and communicate on the various issues that have arisen in the treasury market. indeed, over the years there have been numerous examples of questionable behavior that has come to the attention of the iawg, and these have been channeled onwards to the appropriate authorities. the iawg continues to meet biweekly, as it has since its inception. as you all know, the joint staff report concluded that further work is necessary in light of the evolving structure of the treasury market, and it also highlighted a series of additional steps that the official sector will take to evaluate its approach to this market. i remain very supportive of these efforts. in fact, this conference is among the first of those next steps, and presents a perfect opportunity to have a rich debate on the market ’ s evolving structure and the actions that may be appropriate in response. thank you once again for coming here today. i look forward to our engagement and discussion. the tmpg has since expanded its mandate to include the agency debt and agency mortgage - backed securities ( mbs ) markets. a more recent and equally successful practice has also been instituted for the mbs market. bis central bankers ’ speeches

academic researchers, or other observers, may provide. here i agree with friedrich hayek and " confess that i prefer true but imperfect knowledge, even if it leaves much undetermined and unpredictable, to pretence of exact knowledge that is likely to be false. " one thing is clear, howeverthe sounder the theoretical foundation for monetary policy, the easier the life of a central bank governor. 4. macroeconomic policy challenges for sa the theme of the conference is " macroeconomic policy challenges ”. i do not want to pre - empt the forthcoming discussions, but i thought it would be appropriate to mention some of the macroeconomic challenges that i see facing south africa. the fundamental macroeconomic challenge in south africa is the alleviation of poverty. the best way to alleviate poverty on sustained basis is to generate employment which in turn requires economic growth. although the economy is growing at its highest rate since the advent of democracy, it is generally accepted that to make sustained and significant inroads into the employment and poverty situation, a higher growth trend is required. this is recognised by the accelerated and shared growth initiative ( asgisa ) strategy of government. some of the questions that need to be considered are the challenges and the risks the strategy faces. we face some monetary policy challenges as well. in recent months the risks to the inflation outlook have increased. factors leading to this deterioration include high growth in consumer spending, rising levels of credit extension to the private sector and developments in the international oil prices. although oil prices have moderated recently, upside risks remain, and a challenge we face in the bank is to keep inflation within the inflation target range in the face of significant exogenous shocks as posed by the oil price movements. research on the first and second - round inflationary effect of oil price increases is therefore important for making good monetary policy decisions. high levels of domestic expenditure have contributed to the widening deficit on the current account of the balance of payments. while the deficit is currently more than adequately financed by capital inflows, investor fears relating to the sustainability of the deficit increase the risks of exchange rate adjustments which could threaten the longer - term attainment of the inflation target. the policy challenge is to maintain low inflation within the context of a growing economy and a sustainable external balance. there are also challenges facing our financial markets. south africa is a small open economy by international standards. this in itself presents some challenges for the pursuit of domestic price stability. our foreign exchange market is very