categories such as restaurants and hotels as well as public transport rising significantly. other key services components such as insurance and housing inflation are starting to normalise from their recent lows, with insurance inflation averaging 6. 4 % in the recent outcome ( february ) compared to 3. 1 % at the same time in the previous year. inflation expectations, which have increased and remained above the target midpoint, are also key to the overall evolution of services inflation. they largely characterise wage negotiations and ultimately inform price formation in the economy. monetary policy going forward in light of all this, the sarb has often been asked : what is your view on economic growth and what is your forecast for inflation? these are important questions for any central bank and we find ourselves faced with an important conundrum, that is, juggling high inflation against low growth. like many of our global peers, we are cognisant of weak growth prospects. our gross domestic product ( gdp ) projection for 2023 is 0. 2 %, on the back of the electricity supply deficit. by contrast, inflation remains elevated. our primary goal as a central 3 / 4 bis - central bankers'speeches bank is to anchor inflation expectations and to reduce the extent to which higher inflation does spill over into pricing behaviour in the following year. our role as central banks is to keep inflation expectations anchored to prevent wage spirals from generating permanently higher inflation. as discussed at our monetary policy committee ( mpc ) meeting held at the end of march, the balance of risks to the inflation outlook are assessed to be on the upside. as we have conveyed on several platforms, we believe that we have taken the right decisions over the past few mpc cycles to ensure that we get inflation back to the midpoint of the target range, but this cannot preclude further steps if inflation and inflation expectations continue to surprise higher. at this stage, we do not know what the terminal interest rate level will be, but we hope that the way in which we explain our policy creates confidence that future inflation will come back to target. we continue to monitor data and developments and we stand ready to act, as and when warranted. concluding remarks in conclusion, i think many of us will agree that the emerging financial vulnerabilities are introducing new headwinds for global financial markets. as such, global conditions are likely to remain volatile in the near term, with tightening financial conditions in the us as new weaknesses in financial institutions emerge and concerns of contag

markets remain very tight, even as economic momentum has slowed. this has forced businesses to offer higher wage increases to attract or retain workers. furthermore, indications of still - solid profit margins suggest that firms continue to have significant latitude to pass through costs to their customers. so, while inflation forecasts show a decline in inflation, both for headline and core inflation, the uncertainty about the trajectory is very high. forecasters are unsure about the terminal level of inflation and how fast it will get there. for example, members of the federal open market committee ( fomc ) foresee, on average, personal consumption expenditure inflation of 3. 3 % this year and 2. 5 % in 2024. consequently, the world may, for a relatively long period, have interest rates that are high by the standards of the past 20 years. banking strains and policy while it is clear that central banks prefer to address higher - than - desired inflation with interest rates, there is a possibility for financial stability concerns to cloud policymaking. financial markets have adjusted their forecasts for rates in recent weeks as strains in financial institutions emerged. however, it is important to remember that while pockets of vulnerability exist in the global financial system and can be exposed by the recent quick shift to more elevated funding costs, global banks are by and large much better capitalised and more resilient to shocks than they were before the global financial crisis. this explains why, at least so far, central banks have been able to'ring - fence'problem institutions and maintain confidence through targeted interventions, without compromising on the necessary steps required to bring inflation back to target. this separation of financial stability concerns and the policy steps needed to address inflation is a critical benchmark for policy effectiveness. central banks need to emphasise how the determinants of the two problems differ, how policy in each domain can and should respond, and to maintain the trust of the markets and the public so that the correct steps are taken. how the world affects south africa there are several channels through which the global developments i have just described influence south africa's economy and markets and, in turn, the policy response of the south african reserve bank ( sarb ). first, higher global interest rates weigh on world growth, and hence the demand for south africa's exports. the impact on our balance of payments and, in turn, the rand, can be compounded as slower global growth reduces the prices of our commodity exports. second, global banking strains can also