in the first quarter. consumers also remained optimistic about the prospects for the economy as a whole, although they were still somewhat reluctant to commit to the purchase of durable goods. current developments in enhancing the strength of the financial regulatory environment include the publication of the companies amendment bill, with the purpose of improving the administration and effectiveness of the companies act ; the south african reserve bank amendment act to enhance the bank ’ s governance framework and to uphold its public interest role ; and the proposed draft banks amendment bill, taking into account new international best practices and standards as issued by the basel committee on bank supervision, and to align the provisions of the existing banks act with the new companies act. in addition to international efforts to strengthen the overall robustness of the regulatory environment, some countries have responded by reforming national regulatory systems. these reforms include the extension of central banks ’ powers with regard to supervision, market conduct and consumer protection ; the provision of more appropriate structures and policy instruments to assess and mitigate “ systemic risks ” ; the need to address the “ too - bigto - fail ” moral hazard problems associated with systemically important financial institutions ; and the need to close the regulatory gaps that were prevalent in the build - up to the financial crisis. although some countries are proceeding with regulatory changes, a degree of international convergence around a common international framework is needed. i have briefly highlighted the key issues raised in the financial stability review. more detailed analyses are available in the publication itself, and will be highlighted by the authors ’ presentations. i trust that you will find these interesting, stimulating and relevant to the current environment and invite you to provide comment as part of the important process of ongoing debate on financial stability. thank you.

revision. a consequence of this is that the official cash rate ( ocr ) may be less predictable simply because the world in which we are making our decisions is less predictable. another challenge of uncertainty and low investment both globally and domestically is the downward pressure this creates on the global and domestic neutral interest rate. as a small open economy, our neutral interest rate is heavily driven by the global rate and we cannot escape this. a falling neutral interest rate will increasingly push the reserve bank to the limits of conventional monetary policy space, as we need to lower rates by a greater degree in order to achieve the same amount of stimulus as when the neutral rate was higher. so, what can monetary policy do to offset the effects of global uncertainty and support our long - term prosperity? monetary policy response to uncertainty the reserve bank can contribute to a stable economic environment by continuing to focus on fulfilling its dual - mandate. firstly, maintaining low and stable inflation enables organisations and individuals to carry out meaningful financial planning, by reducing overall uncertainty. this is something that is nearly impossible when prices are high and volatile or falling uncontrollably. secondly, when employment is near its maximum sustainable level, firms have a stronger incentive to make productivity - enhancing investments that raise their capacity. 5 this is hard to identify precisely, but is partly associated with the ongoing shift from manufacturing to services within the economy, with services contributing relatively lower measureable investment. 6 see nolan, pomeroy, and zheng ( 2019 ). uncertainty can affect the monetary policy response through the execution of this dualmandate. in particular, it is now more suitable for us to take a risk - management approach. in short, this means we look to minimise our regrets. we would rather act quickly and decisively, with a risk that we are too effective, than do too little, too late, and see conditions worsen. this approach was visible in our august ocr decision when we cut the rate by 50 basis points. it was clear that providing more stimulus sooner held little risk of overshooting our objectives — whereas holding the ocr flat ran the risk of needing to provide significantly more stimulus later. we can also address uncertainty through our communication and forward guidance, which are broad - ranging. we reveal our assessment of the economy — good or bad — to the public, so they can make decisions based on the best possible information amid the prevailing uncertainty. we voice the types of policies we believe may be needed to sustain long and prosperous growth —