administered price inflation ( mainly petrol prices ). an encouraging development is the moderation in the forecast for core inflation, from an average of 5, 8 per cent in 2016 to 5, 3 per cent by 2018. whereas previously core inflation was expected to breach the upper end of the target range in the third quarter of 2016 for four consecutive quarters, a one - quarter breach, at 6, 1 per cent, is now expected in the fourth quarter of this year. a discussion on the inflation outlook would be incomplete without referring to developments in the exchange rate of the rand, one of the biggest risks to the inflation outlook. the recent volatility experienced by the rand exchange rate has been driven mainly by external factors and changes in global risk perceptions. although the rand depreciated sharply in the immediate aftermath of the british referendum, it has reversed these losses. at the time of the most recent mpc meeting, the rand had appreciated against the major currencies, and on a trade - weighted basis, the rand had appreciated by 12, 2 per cent. the rand has been supported by the global search for yield, the improvement in commodity prices, and also reacted to the unexpectedly large trade surplus recorded in may. despite this recent strength, the rand remains vulnerable to possible changes in investor sentiment ; changes in us monetary policy expectations ; and domestic concerns including the possibility of ratings downgrades later in the year. other risk factors for inflation include increases in average wage growth in excess of inflation and productivity gains ; elevated food price inflation ; and potentially higher oil prices should global demand recover. on the other hand, a weaker global growth scenario could also imply that there may be a degree of downside risk to the international oil price assumption ; a sharp decline in agricultural prices next year should favourable weather patterns transpire as forecast and the absence of demand pressures and weak consumption expenditure growth may also contribute to downside pressures. as you will know, the mpc felt that local and international developments since our last meeting in may in relation to inflation and growth overall justified a pause in the hiking cycle at the july meeting. the situation will continue to be monitored closely as the risks to the inflation forecast are assessed to continue to be tilted to the upside, even if they have moderated somewhat recently. it remains to be seen if some of the favourable factors that contributed to the decision to keep interest rates unchanged will be sustained. this will bis central bankers ’ speeches require ongoing vigilance and careful analysis of incoming data and

with inflation unacceptably high, monetary policy turned toward tightening. central banks in several emerging market economies began to tighten first, seeking to prevent a de - anchoring of inflation expectations that could cause elevated inflation to become entrenched. starting in march 2022, the federal reserve raised its policy rate 5 - 1 / 4 percentage points, and it has been shrinking the size of its balance sheet since june of that year. those actions have tightened u. s. financial conditions, acting to dampen u. 1 / 6 bis - central bankers'speeches s. aggregate demand. activity in the housing sector has slowed significantly, with 30year mortgage rates rising to more than 7 percent, and business spending has been constrained by high interest rates and reduced credit availability. over the past year, amid tightening financial conditions globally, inflation has come down from its peak in most economies. in the u. s., inflation ( as measured by the 12month change in the personal consumption expenditures price index ) has fallen from 7. 1 percent in june 2022 to 3. 4 percent in september of this year. core inflation has declined from a peak of 5. 6 percent in february 2022 to 3. 7 percent in september. i believe the federal reserve's actions contributed to this fall in inflation both by restraining aggregate demand and by keeping longer - term inflation expectations well anchored. the fall in headline inflation was helped by declines in global commodity prices from their 2022 peaks. the spot price of brent crude oil dropped from about $ 115 per barrel in april 2022 to just over $ 80 most recently. global agricultural prices also have retreated from their peaks, though they remain elevated. these price declines occurred partly because the supply of energy and other commodities has been less disrupted than feared in mid - 2022. in addition, the u. s. has become an increasingly important supplier of energy on the global market, with u. s. production of crude oil and natural gas reaching all - time high levels. importantly, global supply chains have largely recovered from their disruptions, with a return to pre - pandemic levels of indicators such as the share of manufacturing inputs in short supply. this recovery has occurred both because of supply responses motivated by high prices for transportation and key inputs and because of a shift of demand from goods back toward services. one big open question we will discuss at this conference is how global supply chains have changed since the pandemic. supply is also a significant part of the dec