that the external risk balance is biased downward. however, we must also be clear that this external scenario finds the chilean economy on the right foot. our growth rates have substantially outperformed those of previous years, investment is the most dynamic component of expenditure and our country has been absorbing a significant increase in the workforce without a corresponding increase in unemployment, while wages continue to grow. today ’ s lower level of inflation and its implications for the two - year convergence, not only allows adjusting the pace of monetary policy normalization, but also provides room to monitor and analyze the evolution of external conditions without the pressure of an imminent adjustment to the policy rate. plus, there the traditional cushioning effect of the exchange rate float and a deep local capital market. summing up, monetary policy is now in an expansionary position, with the policy rate that has remained low for quite a while. although in our baseline scenario we believe that it will still be necessary to raise it in the next two years, we have also been clear about the convenience of taking a break in the coming months. since we began the monetary policy normalization process, we have said that we will conduct this process gradually and cautiously, ensuring that the economy can adapt to a milder monetary stimulus and be on the lookout for changes in macroeconomic conditions that advise adjusting the pace of the process. the recent changes in the international economy and the new inflation measurement associated to the cpi updated belong to this class of changes. true to its commitment, the bank has thoroughly examined these developments, factoring them into its projections, and has concluded that it is necessary to adjust the expected trajectory of monetary policy. accordingly, we have put the normalization process on hold for some quarters, in order to allow inflation to go back to a path of convergence. in the same way, faced with the uncertainty regarding the value of the structural parameters on which the monetary policy is based after important economic changes, we have decided to include an update in the june monetary policy report, which will allow us to gauge its future trajectory. these actions attest to the bank ’ s commitment to its institutional mission, as well as its vocation to act on the basis of solid evidence and rigorous analysis of background information. in this way, we reflect our purpose of being an institution to which citizens can entrust the protection of price stability and financial stability, as essential determinants of their well - being. thank you. figure 1 accumulated inflation, february - december evolution of cpi and

an address by lesetja kganyago, governor of the south african reserve bank, at the south africa tomorrow conference, new york, 1 november 2018 south africa ’ s adjustment path good morning, ladies and gentlemen. thank you for the opportunity to share a few thoughts with you today. last year, we had a goldilocks global economy. inflation started picking up in the advanced economies, and in emerging markets, it was generally in line with targets. growth was stronger, but without much evidence of overheating. growth was also widely shared – most economies were accelerating. the world economy felt just right. as you know, at the end of the goldilocks story a family of bears comes home. our goldilocks tale has taken the same direction. the synchronisation of global growth has broken down this year, with the united states ( us ) surging ahead while other countries slow down. with unemployment at very low levels, the federal reserve has been raising rates, just as they told us they would. the combination of stronger us growth and higher rates has appreciated the dollar. this combination of factors has posed challenges for emerging markets. it has interrupted capital flows and prompted wide - scale currency depreciation. countries with substantial stocks of foreign - currency debt have seen their balance sheets deteriorate. inflation pressures have generally intensified. unlike goldilocks, however, most of us in emerging markets weren ’ t caught napping when the bears showed up. we had frameworks in place to handle such challenges. in particular, most of us could rely on flexible exchange rates to absorb the initial page 1 of 8 shock. this works best when countries have avoided contracting excessive foreigncurrency debt, as in the south african case. in these circumstances, the best thing one can do is to leave the foreign exchange markets to find its equilibrium. it is well understood that currency depreciation creates inflationary pressures. but many emerging market countries have strong central banks who can deal with this problem. given the credibility accumulated by these institutions, inflation expectations have stayed anchored in most emerging markets. 1 emerging markets have also been buffered by substantial stocks of foreign exchange reserves. it is clear that most countries are vastly better positioned than they were during the 1997 / 98 crisis. certainly, a few countries have been sorely tested by events this year, and the international monetary fund has been called into action. most emerging markets, however, should be able to get through without experiencing financial crises or