##s or storage capacity will affect a broad set of prices in many countries. integration in global food markets impacts local food prices. common global factors, such as food and energy, also increasingly determine services prices. 15 as the dollar has strengthened, the inflationary impact of currency depreciation has resurfaced, a result of the reduced appetite for risk and the relative attractiveness of em assets. 16 using principal component analysis, economists at ubs research recently identified that the share of price variance across countries explained by a global factor was at its strongest since 2007, not just for core goods ( ex food and energy ) but also for services. see “ global inflation is turning in all major subsectors ”, global economic perspectives, ubs, 17 february 2023 ” dollar invoicing and the heterogeneity of exchange rate pass - through ”, emine boz, gita gopinath and mikkel plagborg - møller, american economic association, may 2019 as global price pressures rose, inflation expectations also increased, reflecting our local propensity to stagflation. however, not every em central bank faced the same price pressures, nor needed to respond in the same fashion. if we compare the response of monetary policy in south africa to that of its emerging market peers, we see that it falls “ somewhere in the middle ”. our repurchase ( repo ) rate currently stands at 7. 75 %, representing a cumulative increase of 425 basis points since we began raising rates in november 2021, compared to the policy easing of 300 basis points in 2020 in response to the pandemic. our inflation rate is 7. 0 % at present, or 5. 2 % when excluding food, petrol and energy. while both rates are still above the midpoint of our 3 – 6 % target range, headline inflation is off its highs of a few months ago and compares favourably to our emerging market peers. several factors probably explain why south africa did not experience the same acceleration in prices as many other countries. first, budgetary stimulus in 2020 was relatively guarded, and successive budgets have strived for a primary surplus. second, south africa ’ s inflation target credibility helped to dampen the initial waves of global inflation, keeping inflation expectations muted for some time. 17 third, the depth of our domestic capital markets has limited exposure to swings in hard currency interest rates, while south africa ’ s net international investment position has remained positive in rand terms

fund managers are usually given slightly more freedom, in terms of credit and currency allocations for example, than internal portfolio managers. our external fund management programme is also aimed at diversifying reserves into asset classes which we do not have the required resources to manage internally, in terms of both systems and human capital. this includes specialist asset classes such as corporate bonds, asset - backed securities and mortgage - backed securities. in line with our most recent saa review, which started in 2016, we also decided on a different approach to enhance the way in which we selected our external fund managers. this time around, we decided to focus more intensely on the value proposition and value - add the fund manager presented on a specific investment mandate. while the final selection was based on the value proposition in managing a specific mandate, capacity building remained a key consideration in our fund manager selection. page 8 of 13 we have maintained our three - stage selection process. in the first step, a ‘ request for information ’ is used to survey the landscape of fund managers and to identify those fund managers that have sufficient experience in the required asset classes as well as in the management of central - bank portfolios. the second stage, which takes the form of a ‘ request for proposal ’, is considerably more detailed. here, we conduct an indepth investigation of fund manager suitability with regards to organisational capabilities in areas such as risk management and organisational stability. we also request participants to select the mandate or mandates which suit their strongest skill set. importantly, we ask them to submit detailed performance track records in those areas. these track records are then analysed in detail by our risk managers. the subsequently shortlisted candidates are asked to present only on the mandates that they had proposed as their strongest and where we felt, given their track record, they could add the most value. in the panel interviews, the candidates are asked to present their value proposition in their respective mandate in very specific terms, and also to comment on and commit to an outperformance target within a proposed risk limit. this approach has been followed to enhance the efficiency of our selection process and to expose ourselves to those managers who have real and verifiable specialities. this is important not only in terms of optimising performance, but also in terms of skills transfer between the external fund managers and ourselves. the south african reserve bank ’ s current strategic asset allocation framework as i ’ ve mentioned, the most recent appointment of external fund managers was concluded with