oil intensity in many countries and more credible monetary policy frameworks. however, oil and food prices have been the driving forces of recent inflation developments in south africa and pose the major upside risks to inflation both here and abroad. monetary responses to terms - of - trade shocks such as oil price increases are not straightforward and depend in part on the magnitude and duration of these shocks. in essence, the issue boils down to distinguishing between permanent and transitory changes in these prices, and how the first - and second - round effects are likely to influence future inflation outcomes. in general, central banks are not likely to change monetary policy in response to commodity price fluctuations. monetary policy should address the risks emanating from possible second - round effects, i. e. adjustments in expectations triggered by movements in commodity prices which may exert an impact on the inflation process. 7. conclusion not surprisingly, in our uncertain world, there are conflicting views on the outlook for commodity prices. some believe that commodity prices will fall back to their long - term declining trend. others however, foresee a sustained boom, or at worst a levelling off at higher levels, given the ongoing industrialisation in china and other emerging - market countries. whatever the future course of commodity prices, there is little doubt that it will have an impact on our economy. in essence, the policy responses will depend on the macroeconomic impact of the price movements. in this regard, the effect of commodity price movements on inter alia the trade balance, aggregate demand, exchange rate and fiscal developments are of paramount importance. from a monetary policy perspective, our key concern is the possible impact on inflation. food and oil prices are likely to remain an upside risk to the inflation outlook in south africa. monetary policy has to be sensitive to the impact of these developments on inflation expectations and we will act appropriately to prevent the emergence of more generalised inflation. the south african reserve bank remains committed to its primary mandate of ensuring price stability, that is the maintenance of cpix inflation between the target range of 3 to 6 per cent. finally, commodities will retain a central role in the south african economy in the future. a challenge facing our country, and one that is of particular relevance to this audience, is to ensure that women also play their rightful role in this area of economic activity. to this end the recognition of the achievements of women plays a significant role in fostering their interest in all sectors of the domestic economy. thank you.

latter phenomenon has shaped a scenario of higher inflation and, accordingly, higher expectations. actual inflation has already begun rising in developed economies. in the u. s. it went from 1. 1 percent annually in september 2010 to 2. 1 percent in february this year, and in the eurozone it went from 1. 9 percent to 2. 4 percent over the same period. worth noting is the behavior of inflation in the u. k., where it has been above the 2 - percent target since december 2009 and now stands at somewhat more than 4 percent. partly as a result of the wide output gaps that persist in these economies, core inflation remains in low levels ( figure 3 ). emerging economies have seen inflation ’ s velocity of expansion begin rising, especially for core inflation in asia. the higher international prices of foodstuffs have a strong impact on inflation in these economies, considering that they weigh more in their cpi baskets. inflation forecasts for 2011 have been raised everywhere. worth noting is the case of emerging asia, where by mid - 2010 the market consensus expected inflation to average 3. 8 percent annually this year, and revised it upward to 4. 8 percent last march ( figure 4 ). the baseline scenario assumes that during this year the external inflation relevant to chile will exceed december ’ s forecast. in this scenario, the central banks of several economies have either started or continued their monetary policy normalization processes, implying that inflation might be temporarily above their targets, which coincides with the market consensus expectations. some of them have continued applying alternative measures to tone down increases in liquidity and credit, such as china, india, brazil and other countries in the region. in some developed economies, although monetary policy has remained very expansionary – with unconventional measures and record - low interest rates – policy makers have explicitly exposed their concerns about future inflation and a few have even considered the option of beginning their cycle of normalization sooner. thus, in the u. s. and europe, market expectations regarding the timing of the process ’ s kick - off have changed ( figure 5 ). hence, the outlook for world economic growth is somewhat brighter than it was last december. actual output data in developed economies, especially in the u. s., have exceeded expectations and market consensus projections have been revised upwards. for 2011, the world growth forecast assumed in this report ’ s baseline scenario is three decimal points higher than in december. financial tensions relating to the situation in some european bis central bankers ’ speeches economies