: if my memory serves me well, we met in may 2001, at a time when the currency markets were dominated by a strong us $ on the back of strong flows into the usa, although at the time the strong economic growth seen in 2000 was already giving way to a somewhat less favourable growth prospect in the usa. we were all surprised that the us $ was still showing some resilience and continued to be generally strong. as we all now know, things did not stay that way. in the year 2000, the rand lost 22 % of its value against the us $ and during the first five months of 2001 the rand lost about 5. 5 % against the us $, which did not seem too strange based on economic fundamentals at the time. little did we know, of course, that at the end of the year 2001 we would be talking about a 37 % depreciation and that there would have been the attacks on the united states, which would precipitate more conflicts and wars, and change risk perceptions in financial markets. we talked then about volatility in the financial markets and acknowledged that it was becoming a constant feature as the processes of deregulation, liberalisation and globalisation continued to gather momentum. trading in our foreign exchange markets and in the rand was very much influenced by the existence of the nofp and the forward book, with the nofp still registering a negative balance of us $ 9bn, in spite of significant progress that had been made in reducing it from the precarious levels of over us $ 23bn in 1998. this was seen as a negative factor by rating agencies and investors, and we were constantly called upon to explain how we were going to deal with that situation. where did the journey take us after that? as you all know, the period after our last meeting brought with it some major challenges for the world economy, which south africa as a small open economy got its fair share of. however, we also had to face serious challenges that were more related to our own situation. the second half of 2001, especially the fourth quarter saw a steep depreciation of the rand, not only against the us $, but on a broad base. the situation got to a point where the two - way risk inherent in trading the currency was temporarily dislodged, and a perception existed in the market that the rand was a one - way downward bet. our observation of the existence of large speculative positions at the time compelled us

system that also evolve and change. moreover, the data that are used to estimate model parameters and to formulate the economic outlook are inherently uncertain and are often revised as the statistical agencies refine their estimates or gather more information. in addition to uncertainties surrounding macroeconomic models and measurement, there are a number of risks that, if realized, could shock the economy and financial system, making it more difficult for policymakers to confidently assess the economy and the economic outlook. despite these challenges, monetary policymaking requires a forward - looking approach, since its actions affect the economy, labor markets, and inflation with a lag. 2 the post – financial crisis economy and monetary policy at the zero lower bound when i joined the fomc in late 2018, despite nearly a decade of accommodative monetary policy following the financial crisis and subsequent recession, one of the primary concerns was that inflation had persistently been running slightly below the committee ’ s 2 percent inflation target. there was a recognition that the “ natural rate of unemployment ” may have been lower than many on the fomc had estimated, and that inflation may have become greenspan ( 2004 ), bernanke ( 2007 ), and powell ( 2018 ) offer discussions of how risk and uncertainty may influence monetary policy in practice. see alan greenspan ( 2004 ), “ risk and uncertainty in monetary policy, ” american economic review, vol. 94 ( may ), pp. 33 – 40 ; ben s. bernanke ( 2007 ), “ monetary policy under uncertainty, ” speech delivered at the 32nd annual economic policy conference, federal reserve bank of st. louis, st. louis ( via videoconference ), october 19, https : / / www. federalreserve. gov / newsevents / speech / bernanke20071019a. htm ; and jerome h. powell ( 2018 ), “ monetary policy in a changing economy, ” speech delivered at “ changing market structure and implications for monetary policy, ” a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 24, https : / / www. federalreserve. gov / newsevents / speech / powell20180824a. htm. - 3less responsive to reductions in the unemployment rate. 3 this recognition meant that preemptive increases in the federal funds rate based on expected reductions in the unemployment rate alone may not have been needed to keep inflation and