temporary factors, but there is also some indication that both import and export volumes are responding to the depreciation of the rand and the weaker economy. how global headwinds, including china ’ s slowdown may alter this outlook, remains to be seen. as you know, the sarb targets inflation within a flexible framework, which allows for temporary breaches of the target being tolerated under certain circumstances. the inflation forecast has been somewhat erratic, impacted by the combination of a weaker exchange rate on the one, hand and falling oil prices on the other. however, the rand exchange rate remains the one of the biggest upside risks to the inflation outlook. the zar has fluctuated in a range of between r11. 30 and just over r14, 00 against the us dollar since the beginning of the year, depreciating to a historic low of r14. 16 against the us dollar, but more recently we have seen some correction. on a year - to - date basis, the rand is almost 12 per cent weaker against the us dollar. this is in the mid - range of other ems currencies, some of which have depreciated by over 30 per cent ( such as brazilian real ) and others by around 3 per cent ( such as the indian rupee ). the most recent inflation forecasts point to an average inflation rate of 4. 7 per cent in 2015. temporary breaches of the target are expected in the first quarter, and again in the final quarter of 2016. much of this is due to base effects. for 2017, inflation shows a slow downward trend. the sarb monetary policy committee ( mpc ) remains on a gradual normalisation path and is of the view that monetary policy remains accommodative. the mpc has to achieve a fine balance between realising its core objective, and not unduly undermining growth in the shortterm. while we have raised the policy rate in july 2015 by 25 basis points, bringing the cumulative increase in the policy rate since the first upward move in january 2014 to 100 basis points, in real terms monetary policy remains accommodative as pointed out in our recent mpc statement, released in september 2015. the current environment requires policy makers to remain vigilant and to carefully analyse incoming data, and not hesitate to act if the risks of a more persistent breach in the inflation target materialise and inflation expectations become unanchored, thus posing a threat to inflation outcomes

daniel mminele : south african monetary policy amidst an uncertain and volatile global economic backdrop address by mr daniel mminele, deputy governor of the south african reserve bank, at the economist annual investment agenda conference, johannesburg, 20 october 2015. * * * good morning ladies and gentlemen. thank you to the economist for the invitation to deliver the welcome keynote address at “ the investment agenda johannesburg 2015 ”. the first part of the title of the investment agenda, “ no man is an island ”, is taken from a poem of john donne. to quote a little further from that poem : “ no man is an island, entire of itself ; every man is a piece of the continent, a part of the main … ” this expression can be related not only to our personal lives, but lends itself particularly well to the world of financial markets and economics. each part of the economic and financial system, while separate, is driven by similar factors with many interdependencies. for example, the global financial crisis of 2008 / 09, started off as a crisis in the housing sector, but quickly broadened to money markets and other areas of the financial sector. in addition, the crisis was not contained but spread from the us to other advanced economies ( aes ) and ultimately to emerging markets ( ems ). it had serious ramifications for economic growth, employment and inflation, and ultimately elicited strong responses from both fiscal and monetary authorities. some have argued that these responses sowed the seeds of other crises, citing the european sovereign debt crisis, and more recently, the increasing talk of a possible em crisis on the back of a credit crunch fears as capital flows decelerate or reverse. in my remarks today, i would like to delve a little into the global economic environment, particularly as it pertains to monetary policy as a source of financial volatility and the more recent developments in china and how this is impacting on africa. i will then conclude with a few remarks on monetary policy in south africa against this backdrop. global monetary policy monetary policy has been one of the dominant topics in financial circles over the past few years. the current nuance of concern is how the conduct of monetary policy in aes is influencing financial market developments and the spillover effects to ems. i am sure you have been inundated with information on this topic. however, please indulge me a little since, after all, it is a source of substantial uncertainty and vol