was marked by further enquiry into monetary policy frameworks. the early 2000s saw our biggest policy shift, the adoption of the inflation - targeting framework. at the time, south africa was the 13th country to introduce this policy framework. the governor at the time, tito mboweni, was tasked with guiding the sarb through this uncharted territory. our inflation target, set by the minister of finance in consultation with the sarb, is between 3 % and 6 %. the adoption of inflation targeting saw a radical change in the way in which the sarb communicated with the public, focusing on transparency through communication, and ensuring that independence and accountability worked hand in hand. the flexibility of the inflation - targeting framework and its anchoring of public expectations about inflation assisted the country to weather the global financial crisis in 2008 and 2009. with the critical role of financial institutions in that crisis underscored, governor gill marcus helped expand the sarb ’ s mandate to explicitly include financial stability. in doing so, a financial stability committee was formed and resources expanded for its work. the early 2010s also saw cabinet approve the move towards the twin peaks model. the financial sector regulation act was signed into law on 21 august 2017, paving the way for the formation of the prudential authority. in april 2018, the prudential authority was officially launched, amalgamating the sarb ’ s bank supervision department, the insurance division of the financial services board and the supervisory team of the co - operative banks development agency. the sarb was born at a time when the world was exiting the devastating impact of the 1918 spanish flu pandemic. as we approached our centenary year, the world began grappling with the great flu pandemic of our time, the coronavirus disease 2019 ( covid - 19 ) pandemic. as covid19 cases began to rise, south africa, like many other countries, mandated forceful containment measures to abate the human cost associated with the virus. while these measures minimised the impact on human lives, they came at a great cost to the economy. south africa ’ s real gross domestic product contracted by a substantial 7. 0 % in 2020. this was the second - largest annual contraction since 1920, and about five times larger than the contraction following the global financial crisis in 2009. unemployment recorded its highest level since statistics south africa began measuring unemployment. both headline producer and consumer price inflation recorded historic annual average lows of 2. 5 % and

moving in response to a host of other factors as well ). often, the expectation of what will happen to the cash rate in the future is just as important as, or even more important than, the level of the cash rate today. for this reason what the bank says – or what people think we have said – can be very influential on markets and behaviour. it is for this reason that central bankers are usually so guarded in public comments. the effects of monetary policy in a diverse economy it is obvious even from the above highly condensed description that monetary policy will affect different groups in different ways. for a start, changing interest rates shifts the distribution of income between savers and borrowers. the larger the size of one ’ s balance sheet – either assets or debt – the more likely one is to be affected by a change in rates of interest. someone with no debt and no savings will probably feel little impact – if they feel anything at all – of a change in interest rates, at least directly. in addition, we only have one set of interest rates for the whole australian economy ; we do not have different interest rates for certain regions or industries. we set policy for the average australian conditions. a given region or industry may not fully feel the strength or weakness in the overall economy to which the bank is responding with monetary policy. in fact no region or industry may be having exactly the “ average ” experience. it is this phenomenon that people presumably have in mind when they refer to monetary policy being a “ blunt instrument ”. the issue is that it is not possible to have different monetary policies by region or by industry within the country, at least not while we are all using one currency and funds are free to flow around. either each area that wanted its own interest rate would also have to have its own currency, or there would need to be a draconian set of regulations to prevent savings in one region flowing to another to be loaned out – a sort of local and regional equivalent to the pervasive capital controls which once existed on international capital movements. quite possibly both of the above might be needed for a comprehensive tailoring of interest rates to each set of local conditions. obviously that is unlikely to be practical. moreover there would be costs for a region having its own currency. it would have to establish its own reserve bank for a start, and would have to accept additional transactions costs for cross - border transactions with other regions, which would probably inhibit trade and investment flows with other regions in