, or a grexit occur. the emerging market economies are likely to be affected significantly by these developments and countries with weak macro - economic fundamentals and indicators in particular are likely to be most vulnerable. the role of the sarb in the economy the constitution mandates the sarb to protect the value of the currency in the interest of balanced and sustainable economic growth. we strive to achieve this objective within a flexible inflation targeting framework as it is widely believed that price stability is a necessary pre - condition for balanced and sustainable growth. the global financial crisis has, however, demonstrated that price stability in, and of its own, is not sufficient to ensure that financial stability is achieved. this resulted in the bank ’ s mandate of price stability being expanded to include the additional responsibility of overseeing and maintaining the stability of the broader financial system. south africa has opted to shift to a twin peaks model of financial sector regulation which represents a move away from a fragmented regulatory approach ( based on the institution or activity ) towards a regulatory and supervision model based on objectives. in terms of proposed legislation, the bank will house the prudential authority, which would supervise the safety and soundness of banks, insurance companies and other financial institutions, while the market conduct authority would supervise the way in which financial services firms conduct themselves and treat their customers. these reform forms part of the current broader overhaul of the global regulatory system, which aims to address the too - big - to - fail problem of systemically important financial institutions, building resilient financial institutions, reducing the opacity of over - the - counter derivatives markets, mitigating the impact of shadow banking on financial stability, enhancing financial benchmark transparency, and promoting the convergence of accounting standards. the importance of international dialogue and erm frameworks for central banks the increased connectedness of the world, within which we operate, has necessitated closer cooperation and coordination within the central bank community. the need for this has once again been highlighted by the global financial crisis and the subsequent attempts to not only bis central bankers ’ speeches restart the global economy but also to undertake an ambitious global regulatory reform agenda in order to address and avoid the excesses and imbalances that led to it. this illustrates the importance of collaboration between central banks. without strong international leadership and active collaboration it would not have been possible to progress the overhaul of the global regulatory system to the extent that had been achieved. the expanded mandate of central banks may in the longer - term lead to demands for greater accountability and

the pressing maintenance needs if supply safety and quality are to be secured. the mpc also sees risks of a pickup in food prices in the outer years of the forecasting period. in addition, any unresolved domestic policy uncertainties could trigger exchange rate volatility even in the absence of external shocks. page 7 of 9 the south african reserve bank ’ s reaction and policy mandate following its decision to hike the policy rate by 25 basis points at the november 2018 meeting, the mpc felt that the inflation backdrop and outlook had improved sufficiently enough to warrant keeping the policy rate unchanged at the january meeting. while the mpc still judged the policy stance as broadly accommodative, the endogenous rate path generated by the qpm now only entails one hike of 25 basis points in the policy rate, to 7. 0 % by the end of 2021. as previously indicated, this does not represent policy guidance nor commitment. the mpc will remain alert to any possible secondround price effects of potential shocks and stands ready to act accordingly should data indicate a shift in the inflation outlook and the risks thereto in either direction. it has at times been suggested that the sarb should place greater emphasis on growth and employment objectives, or even that its mandate should be modified to make such objectives clearer. these suggestions may miss the key channels through which monetary policy best serves the goal of long - term economic development. south africa ’ s monetary policy framework is not one of rigid inflation targeting, but a flexible one, which takes full account of the outlook for real economic growth and how it is likely to affect inflation over the forecasting period. for instance, when demand is weak and exerts downward pressure on prices, the sarb has far more latitude to ‘ see through ’ external price shocks than in an environment of domestic ‘ overheating ’. however, as i mentioned earlier, trying to ‘ kick - start ’ economic growth and employment through a larger dose of monetary stimulus would probably have only a short - lived impact on activity. by contrast, its implications for the current account, policy uncertainty and inflation expectations would most likely be negative. over time, therefore, the consequence would probably be higher, rather than lower, interest rates. international and local experience does suggest that it is a stability - oriented monetary policy framework, focused on reducing price volatility and risk premiums on financial assets, that has the best chances of delivering lower interest rates and stronger economic growth, amid sustainable investment