guidelines were indeed treated as guidelines only. a further guideline for growth in total bank credit extension of around 10 percent was also adopted. but when these guidelines were exceeded by considerable margins, this was on occasion tolerated without strong policy adjustments, on the basis of developments in other variables. in practice it was quite apparent that growth in the money supply could sometimes be a misleading indicator of current and future inflation. accordingly, a number of other variables were also analysed in deciding upon the appropriate monetary policy stance. these included the pace of growth in the banking sector ’ s credit extension, movements in consumer price and production price inflation, domestic production and expenditure, the balance of payments and exchange rate situation, and the fiscal policy stance. the inflationary potential of developments in all these and many other variables was assessed on an ongoing basis. accordingly, growth in money supply was not really the pivotal variable around which monetary policy revolved - although excessive growth in money supply certainly did signal the need for additional caution. however, money supply growth was deemed to be important and was formally recognised as the intermediate target variable. what has since changed? instead of targeting guidelines for intermediate objectives, the reserve bank now directly targets inflation. it monitors and analyses a whole range of factors that can affect the rate of inflation. the inflation rate, or more specifically cpix, which is the headline consumer price index excluding mortgage costs, has to fall between 6 and 3 percent by the end of the calendar year 2002 and 2003. it is within this target and this monetary policy framework that the south african reserve bank will strive to achieve in the short term what we are mandated to do : that is to achieve price stability. such a framework for monetary policy ensures that monetary policy is transparent, in that the authorities have a definite and measurable aim in their conduct of monetary policy. and at the same time, it should give the citizens of this country an aspect of clarity about the future as it makes clear the bank ’ s intentions. in so doing, inflation targeting should also ease the burden and take the “ guesswork ” out of many of the decisions that businesses have to make when planning for future expansion and investment. it should also provide an anchor for inflation expectations and guide both employers and employees when undertaking forward - looking negotiations. however, it must be emphasised that at least some of the success of the inflation targeting framework rests on whether it is fully understood by labour, business, the private sector and the other sectors of the economy. if these

great recession, and a slow recovery in consumer spending ( ibid ). today, consumer spending is almost back at pre - recession levels, providing significant support for domestic demand and, crucially, employment ( cso 2019 ). although, i note that this time spending growth is not accompanied by a build - up in household indebtedness. in fact, since 2016 – a period when consumer spending growth has averaged around three per cent per year – household debt - to - income ratios have fallen by 31 percentage points, from 151 to 120 per cent ( central bank 2019 ). beyond the aggregate, distributional effects in economic outcomes is now a key theme in macro modelling ( moll, 2017 ). issues like the distribution of income, wealth and debt are increasingly discussed in central banking circles. it is important that we understand how different shocks and policy choices affect different groups in society, and how these differences influence aggregate outcomes ( ampudia et al, 2018 ). and this is possible now, precisely because of the advent of better data like the household finance and consumption survey. not only does it bring macro theory more into line with reality, but it also allows for differences in behaviour across the income and wealth distributions to be better reflected in the models. one interesting finding is the extent to which a monetary stimulus reduces income inequality by boosting the incomes and employment of lower income households ( lenza et al, 2018 ). i look forward to hearing more in philip ’ s lunch - time remarks, as well as in the conference tomorrow. and while here we refer to micro household finance data in monetary policy, we have of course had lengthy discussions on the role of micro data in monetary policy more widely ( donnery, 2016 ). a house purchase is for many the largest asset they will buy over their lifetimes. in ireland, we have seen excessive swings in house prices, and so had different wealth effects on households depending when they purchased. through data analysis we know how debt affects households ’ responses to income and wealth shocks. a lack of resilience spills over to the real economy making for longer, and deeper, recessions. the irish experience over the last two decades paved the way for us to collect loan level data and develop what are now critical macro prudential instruments. the data we collect allows analysis of both bank and borrower balance sheets which contribute to our policy framework. good data is key to understanding both the origin and transmission of shocks, and to develop policy to