households to continue operating with less electricity, many sectors of the economy have had to curb production. affected sectors include construction, mineral beneficiation and manufacturing. while south africa has successfully brought about 160 mw of renewable energy into the grid, this boost is too small to make a difference to the bis central bankers ’ speeches aggregate capacity. the national treasury estimates that electricity shortages have cost the economy about half a percentage point of growth a year, with this figure possibly being higher in 2014. these two features, labour disputes and electricity shortages, have contributed to low levels of business confidence and investment, both of which are impacted upon by perceived policy uncertainty, particularly in areas such as mining and agriculture. firms are reluctant to invest because they are uncertain about future demand and labour and energy costs. in turn, consumer demand is weak because firms are not investing and employment is not growing. generally, governments break this cycle through higher public investment spending. south africa is in the midst of a major public investment programme, focused largely on energy and freight logistics capacity. despite positive growth in public investment, it has not been sufficient either to crowd in private investment or to lift the aggregate employment picture. in the 2nd quarter of 2014, private sector investment growth was negative for the first time since 2009. at the same time as the economy has been performing poorly the central bank has had to contend with rising inflation. inflation was above our target range of 3 to 6 per cent for one quarter in 2013 and has been outside the range since march this year. this combination of slowing growth and rising inflation is a difficult one for central banks to manage. the picture is complicated by the fact that normally, when growth slows, imports slow, reducing the current account deficit. this time, despite slower growth, imports remain sticky. and despite an exchange rate depreciation of almost 40 per cent since 2012, export performance has remained weak. this implies that south africa still has a large foreign financing requirement at a time when global interest rates are rising and confidence in the domestic economy is sub - optimal. theories as to why exports have not done better given the weaker exchange rate range from poor european growth and slower demand from china to more fundamental competitiveness and structural problems in the south african economy. the reality is that both weaker growth in our key markets and faltering competitiveness in key export sectors are impacting on south african exports. the main driver of higher inflation has been the effects of currency depreciation, which in turn is due to

instance, the bank of canada and riksbanken have done so recently, and the federal reserve system has just launched one. the fed review was announced to be wide - ranging, without prejudging where it will lead. the federal reserve board has outlined questions for the review that focus on the symmetry of its inflation objective, the adequacy of its policy tools and the enhancement of communication. 2 if i have understood it correctly, the strategy review is best seen as an important research program, but also as an inclusive dialogue with the academia and the civil society, important for legitimacy. every central bank must operate under its own mandate. the mandate defines the scope of the strategy review. i have also been advocating for a review of the european central bank ’ s monetary policy strategy. the last time eurosystem has done a comprehensive strategy review was 15 years ago in 2003. that was before the financial crises and low inflation, before our forward guidance and the large - scale asset purchases. my motivation for a review stems from the previously mentioned structural changes, which seem to have lowered the long term real natural rate of interest. the natural rate of interest is one of the key concepts for understanding monetary policy. its modern usage in fact dates back to the swedish economist knut wicksell, who in 1898 defined it as the interest rate that is compatible with a stable price level – a still valid definition. 3 / 4 bis central bankers'speeches why is a low natural rate of interest a problem? because it increases the risk of monetary policy hitting the zero lower bound, making monetary policy ineffective. this in turn would prevent the necessary easing of monetary policy stance, as well as eventually lead into permanently too low inflation expectations compared to our definition of price stability. i wish that the outcome of a strategy review, if and when launched, will lead to more effective and timely monetary policy that fulfills our primary objective of price stability – and, “ without prejudice to the objective of price stability ”, supports “ the general economic policies in the union, with a view of contributing to the achievement of the objectives of the union ”, which include, inter alia, “ full employment ” and “ balanced economic growth ”. ladies and gentlemen, dear friends, on a final note, let me come back to our common heritage of liberty and anders chydenius. his era was still characterized by mercantilism and clericalism, yet, chydenius wrote about and fought for the freedom of speech