properly demonstrate commitment to lowering inflation. in spite of the above - mentioned quite ambitious target, by september 2001, twelve - month cpix inflation had decelerated to 5, 8 % per cent and many analysts thought that the 2002 target would be met fairly easily. to say the least, circumstances changed! the exchange rate depreciation of some 37 per cent in 2001 - that is another interesting story! - mostly in the closing stages of the year, was significantly responsible for pushing up cpix inflation up to a peak of 11, 3 % per cent in november 2002. on 12 september 2002, the reserve bank's monetary policy committee had announced the fourth and final 100 basis points increase for the year of the bank's repurchase rate. as you may well imagine, i was not everyone's most - favourite governor! fortunately, inflationary pressures have abated, partly related to the rand's appreciation since december 2001 and as reflected in the year - on - year change in cpix falling to 6, 6 per cent in july 2003, and the mpc has seen fit to lower the repo rate. on 14 august 2003, following the most recent meeting of the mpc, the repo rate was further reduced by 100bp to 11 per cent effective from 15 august 2003. ( should there be anyone amongst you interested in the factors weighing on this decision, i refer you to the statement of the monetary policy committee which is on the reserve bank website ). whilst a governor is certainly more popular during a declining interest - rate cycle, rest assured there were critics who felt that the bank had not been bold enough and should have, at least, reduced the repo rate by 150 basis points! technically, what the reserve bank is doing could more accurately be described as inflation - forecast targeting. given the roughly 12 to 24 - month lag between interest - rate changes and their having their full impact felt on inflation, the repurchase rate is set at a level judged to be consistent with bringing inflation to within the target range within an 12 - to 24 - month time horizon. i am referring to the intricacies of the transmission mechanism, the clear understanding of which represents the single biggest challenge for any inflation - targeting central bank. inflation targets of 3 to 6 per cent for 2004 and 2005 have been set by the government, and guide current policy formulation. given the lags, current policy changes clearly have virtually no impact on the 2003 inflation outcome ; the focus

lesetja kganyago : south africa ’ s september 2014 financial stability review introductory remarks by mr lesetja kganyago, deputy governor of the south african reserve bank, at the launch of the september 2014 financial stability review, johannesburg branch of the south african reserve bank, johannesburg, 29 october 2014. * * * members of the press, guests and colleagues, welcome to the release of the september 2014 edition of the financial stability review. the financial stability review has been published semi - annually since 2004 which makes this year its tenth anniversary. in addition to its primary objective of price stability, the bank also oversees and maintains financial stability. in pursuit of this mandate and to contain systemic risk, the bank continually assesses the stability and efficiency of the key components of the financial system and formulates and reviews policies for intervention and crisis resolution. through the publication of its financial stability review the bank endeavours to communicate its assessment of potential risks to financial system stability. the bank also strives to enhance the understanding of, and encourage informed debate on these complex and challenging matters related to financial stability. south africa is in the process of reforming its financial - sector regulatory architecture by implementing a twin peaks model of financial regulation. under this approach, supervisory roles will be streamlined between the bank and the financial services board. the financial sector regulation bill, 2013, gives primary responsibility to the bank for promoting financial stability. in terms of this bill, a newly created prudential authority within the bank will be responsible for the prudential supervision of banks, insurers, financial conglomerates and financial market infrastructures. the financial services board, in future to be known as the financial conduct authority, will be responsible for consumer protection through its marketconduct regulation and supervision. the bank transformed its financial stability unit into a fully - fledged financial stability department with effect from 1 april 2014, and elevated the status of the financial stability committee which has been in existence since 2000 to include deployment of macro prudential tools. the financial stability review is currently being revamped in line with the explicit financial stability mandate of the bank and global best practice. the revamped publication will report in more detail on financial stability policy decisions once the new architecture is in place. the financial stability department is in the process of developing a toolkit of macro - prudential policy instruments in addition to further refining its monitoring framework for financial stability, developing a top - down stress testing model and preparing policy proposals for the development of a resolution