18 months or longer from when policy interest rates are raised to when it fully works through and moderates the inflation rate. in this world of long lags, credible inflation targeting seems a useful mechanism to shorten the outside lag and perhaps moderate the magnitude of the interest rate changes required to achieve a particular outcome. if there is no doubt that the authorities are committed to the inflation target and will in the end prevail, economic agents are likely to set their prices and wages at levels readily reconcilable with the inflation target, and are likely to view deviations from the target as temporary. less interest rate medicine is likely to be required with such a forward - looking expectations formation process. less sacrifice would therefore be required to get to the inflation target range and to remain there. but this could only work if the central bank is fully committed to the inflation target, is independent and willing to use its policy instruments to the full extent needed, and if all economic agents know this. in cricket, one - day games have risen in popularity as the tempo of life has accelerated. most people simply do not have five days to watch the traditional kind of match. so things have been speeded up ; without it, the cricket world cup tournament would have taken ages to complete. it seems preferable to also speed up the tempo at which inflation unwinds and returns to our 6 to 3 per cent target range, working along the lines of the forward - looking expectations process described previously. while i have no doubt at all regarding the reserve bank's independence and commitment to achieving the inflation target, the lag structure in economic agents'response will be most interesting. may we have a one - day match rather than a marathon! 6. conclusion low inflation and financial stability support sustainable economic growth, development, equity and employment creation. they are not in opposition to it. while some short - term trade - offs cannot be denied, allowing inflation to take root has dire long - term consequences. cpix inflation is already in deceleration mode, and the reserve bank will vigorously ensure that it ends up in the 6 to 3 per cent target range. thank you.

tt mboweni : inflation, growth and employment opportunities lecture by mr tt mboweni, governor of the south african reserve bank, at the department of economics, university of stellenbosch, stellenbosch, 6 march 2003. * 1. * * introduction members of the portfolio professors, staff, students, ladies and gentlemen and select committees on finance, deputy vice - chancellor, it is very pleasant to be on this side of the beautiful hex river mountains and to speak to you on a number of issues right at the core of central banking. the accusation is often heard that central bankers have narrowed the world down to inflation, and do not have an open mind on any other matters. not true! the way in which these matters come together - the principles behind their interaction - will be central to my talk to you today. 2. the magnitude of the challenges facing our economy starting with a longer - term picture of inflation, it is a well - known fact that the double - digit inflation which reigned from 1974 to 1992 left considerable scars on our economy. its redistributive impact was nasty, with the buying power of the most vulnerable groups in society, the poor and the elderly, in particular being undermined. the plight of a pensioner who retired twenty years ago using interest on a fixed deposit to provide for himself or herself is illustrated by the cost of a basket of consumer items which cost r100 in early 1983. the cost of that basket shot up to r380 in early 1993, and currently amounts to r815. although inflation has receded to single - digit levels and has averaged around 7, 8 per cent per annum over the last ten years, this is still enough to very significantly erode the living standard of the most vulnerable groups in our society over time. some distortions therefore remain, leading to frictions and misallocation of resources. high unemployment continues to characterise the south african labour market. based on the responses of a representative sample of 30 000 households sampled in the february 2002 labour force survey, statistics south africa puts the official unemployment rate at 29, 4 per cent. the absolute number of the unemployed amounts to 4, 7 million people. and these are people who are looking for jobs - it does not cover those who have given up. the opportunity cost to our economy is huge : even if each of them would only produce goods and services to the amount of r650 per month ( the equivalent of the minimum wage in