% in both 2019 and 2020. second, there has been a welcome decline in inflation expectations, as reflected in the survey conducted by the ber. for some time, these expectations had been stuck at around the upper end of the target range. in the most recent ber survey, however, the average declined by half a percentage point to 5. 2 % and 5. 3 % for 2018 and 2019 respectively. similarly, the five - year - ahead inflation expectations declined to 5. 3 %, their lowest since they were first surveyed in 2011. the sarb recognises, however, that one reading does not constitute a trend, and we would need to see further declines, or at least a stabilisation at these recent levels, to feel confident that inflation expectations have fallen on a sustained basis. furthermore, to the extent that inflation expectations are backward - looking, it could take some time for these expectations to move to lower levels, particularly if actual inflation is expected to trend upwards from here on. in other words, it is too early to declare victory in our quest to anchor inflation expectations closer to the midpoint of the target range. this improved inflation environment has contributed to a sounder macroeconomic environment, one where earnings are not eroded at an excessively fast rate. it has also afforded some room for monetary policy to remain accommodative for now and help foster improved economic growth. at the most recent mpc meeting, the repurchase rate ( repo rate ) was reduced by 25 basis points to 6. 5 %. with mediumterm inflation expectations at just over 5 %, this implies a real repo rate of around 1. 5 % compared with the sarb model ’ s estimate of the current neutral rate of around 2 %. the mpc ’ s assessment at that time was that the risks to the inflation outlook were more or less balanced. in its deliberations, most of the upside risks emanated from external sources. these risks are transmitted to the economy via the exchange rate and, by extension, to the risks to inflation. page 7 of 10 as an inflation - targeting central bank, the sarb does not target the exchange rate but rather focuses on the second - round effects of exchange rate changes ( in both directions ) on the inflation outlook. this implies that our assessment of the risks to the rand is an important, although certainly not the only, determinant of how we see the inflation trajectory going forward. at the march 2018

global financial crisis. equally, the adoption of a different anchor – for example the exchange rate – would be very difficult for south africa as we are a commodity exporter and therefore regularly exposed to large terms - of - trade fluctuations. the truth of the matter is this : low and stable inflation is the best contribution that monetary policy can make towards stronger and more sustainable economic growth and poverty reduction. as the saying goes : “ facts do not cease to exist because they are ignored. ” there is no better way to contribute to the socio - economic well - being of a nation than to protect the cost of living of its citizens. in his speech titled „ whip inflation now [UNK], us president gerald ford warned that inflation would „ destroy our country, our homes, our liberties, our property, and finally our national pride [UNK]. as the sarb, we remain committed to formulating and implementing monetary policy aimed at controlling inflation at low levels, in line with the independence that the constitution guarantees us, while remaining relevant to the context in which we operate. thank you. page 8 of 8