, pushing public debt ratios higher. and while economies continue to grow in real terms, the experience of the past few years – in particular, their abrupt slowdown in 2015 – highlights the region ’ s vulnerability to external developments, such as swings in resource prices or a rebalancing of china ’ s growth path towards less commodity - intensive demand. finally, while inflation in the first half of 2018 was reasonably benign in the majority of african countries, the sensitivity of consumer price trends to prices of oil and food commodities, and to exchange rate swings – because of the high share of consumer goods that are imported – is a strong reminder that such stability cannot be taken for granted. what will happen next? how will the emerging market situation evolve over the next few months and quarters? in the past couple of weeks, pressure on emerging currencies and other assets has abated to some extent, helped by signals from several central banks indicating that they would not tolerate durable upward shifts in inflation. however, it is too early to predict a stabilisation in emerging market assets, and too early to say with confidence whether the recent market correction will, or will not, turn into a more severe adjustment that could severely undermine growth prospects, and possibly strain corporate and bank finances in emerging countries. at present, many economists are of the opinion that emerging market assets, and especially currencies, are more fairly valued than they were at the start of the year. however, historical experience tells us that ‘ overshoots ’ can often happen, following adjustments similar to what has just been witnessed, and financial assets can face an extended period of volatility before settling around new ‘ equilibrium ’ values. there are, however, some encouraging factors which should limit the risk of a further, severe adjustment. first, as i indicated earlier, growth in advanced economies has remained relatively resilient, much as risks seem tilted to the downside. even in emerging markets, with the exception of argentina, turkey and south africa, growth forecasts have not significantly changed since early 2018 ; hence, the risk that financial market stress in emerging countries could negatively ‘ spill back ’ into the advanced economy growth outlook still appears, for now, to be low. importantly, too, much as the risk remains, we are not witnessing the kind of inflation pressures that might force the world ’ s major central banks into a significantly faster pace of policy tightening – potentially derailing economic expansion. while both headline and core inflation are at present higher in

. the explanation clause there have been suggestions that we invoke the explanation clause as a means to avoid further monetary policy tightening. there appears to be confusion about the applicability of the explanation clause. there is an assumption that the clause relieves us of the need to react to supply side shocks and that we do not have to worry about the inflation target. this is a misinterpretation of the explanation clause. the clause is worded very carefully and it says that “ when the economy is buffeted by a supply side shock similar to those envisaged by the original escape clause that will take cpix inflation outside the target range ( e. g. an oil price shock, a drought, a natural disaster, or financial contagion affecting the currency ), at the subsequent meeting of the monetary policy committee, the sarb will fully inform the public of the nature of the “ shock ”, the anticipated impact on cpix inflation and the monetary policy response to ensure that inflation returns to the target and the time frame over which this will occur. ” there are two important points worth noting. first, the clause clearly allows for us to be outside the target range because of first - round effects of supply side shocks. second, it does not relieve us of the responsibility of getting inflation back to within the target range. the clause clearly stipulates that if cpix is out of the target range, we have to explain why, and what we are doing about it. this is something we do after each mpc meeting in any case. but it does not tell us that no effort should be made to ensure a return into the target range. cpix is currently outside the target range primarily but not only as a result of factors beyond our control, and in line with the explanation clause, we are now taking strong steps to ensure that cpix returns to within the target range. as we have noted in our most recent mpc statement, we currently expect cpix to be back within the target range by the end of 2009. however, this is not an unconditional commitment. the outlook may deteriorate further in the light of new developments, and require a reassessment of the monetary policy stance. 7. conclusion we appear to be going through an extended adjustment in relative prices. the good news is that these relative price adjustments will eventually come to an end. the bad news is that we do not know when and what the long - term levels are going