second lesson is that inflation targeting seems to have survived the test. in my view, increased transparency and the efforts made to improve the communication of monetary policy to the general public have been very valuable. the chart shows the baseline scenario for the key policy rate with fan chart from october 2008 and the baseline scenario for the key policy rate as of december 2008, only 2 months later. the large downward shift in the baseline scenario illustrates the size of the shock that hit norway ( and the global economy ). although considerable revisions in the interest rate forecast had to be made during the crisis, this did not lead to any change in the credibility of the central bank. explicit interest rate forecasts were introduced in norges bank in 2005. the decision to publish the forecast was the next logical step in developing the bank ’ s communication. when we started publishing our own interest rate forecasts, we had to make sure that financial market participants, journalists, banks and a broader audience understood the framework. a key issue was to convey the contingency and the uncertainty in the forecast. as one of the reasons for publishing the forecast is to improve the general understanding of the bank ’ s response pattern, it has been important to explain the logic behind the forecast. this includes shedding light on the considerations underlying each interest rate forecast and what their objectives and the trade - offs between them are. in general, interest rate forecasting has been effective. as market expectations tend to react to economic news largely in line with the bank ’ s reaction pattern – there is little doubt that the contingency of the forecasts is well understood. transparency eased communication : an account of the factors behind the revision in our monetary policy report, the interest rate forecast is accompanied by a separate chart, shown here, that shows the revision since the previous report due to changes in exogenous factors. by carefully explaining the reasoning behind the revisions of our interest rate forecasts, financial market participants and other interested parties can make their own judgment as to whether the revisions seem justifiable. in general, interest rate forecasting has worked well. as market expectations tend to react to economic news largely in line with the bank ’ s response pattern, there is little doubt that the contingency of the forecasts is well understood. interest rate forecast and exit strategy another advantage of publishing our own forecast for interest rates is that the exit strategy is an inherent part of the bank ’ s communication. a key element of any exit strategy is that policymakers must guide

transition process as one which entails multiple and carefully sequenced steps, beginning with the stabilisation of the jibar to secure the transition period. this is followed by the establishment of new rates and foundations for new markets, and then by the adoption of those rates before full transition takes place. thus far, the work of the mpg has largely focused on strengthening the current jibar framework in line with the first step, as well as on finding new alternatives. this work has now been completed and the project is proceeding to the next phase which entails thinking about the most suitable transition approach to be adopted by south africa. as its work is advancing, the mpg intends to keep all stakeholders informed of its progress and the next steps, and this is why we are here today. thus, the purpose of today ’ s mpg forum is twofold : page 3 of 4 first, to report on and inform stakeholders of key decisions, considerations and recommendations made by the mpg in relation to the reform of the jibar and the choice of an alternative overnight reference rate for south africa ; and second, to outline the envisioned transition process to an overnight rate as a key reference rate for the south african financial market. as we engage in this conversation, i wish to reiterate the position the sarb has taken regarding the future of the jibar. earlier, i alluded to deficiencies in the current jibar framework, which have led to the sarb taking a decision to reform the jibar. the unsecured reference rate work stream and later the jibar task team have done commendable work in this regard, to ensure that the jibar framework is strengthened to enhance its robustness. however, changes to the jibar framework should not be understood as implying that the jibar will continue indefinitely. the sarb, as the benchmark administrator of the jibar, has decided that the jibar will cease at some future point. the enhanced framework will remain in place for a limited time, after which south africa will transition to alternative reference rates. in the new interest rate dispensation, we expect that the key reference rate will be an overnight near risk - free rate, which may or may not co - exist alongside a risk - based term rate. at this point i would like to hand over to my colleagues to share with you the decisions that have been taken thus far, their motivations as well as the trade - offs we have had to manage leading up to