will be watching to see whether wages and other compensation continue to moderate or if they become a factor preventing progress toward our inflation goal. while i focus on the overall inflation numbers, it is still useful to look how the different components of inflation have moved. a big factor in the improvement of inflation over the past year has come from goods prices which fell during 2023. goods prices represent almost 25 percent of core cpi inflation. even at times of very low inflation, goods deflation is modest in a growing economy, so one question is whether this contribution to progress on inflation will continue. another big contributor to cpi inflation is the cost of housing services, which measures the estimated costs of renting or the equivalent for owning a home. housing cost inflation represents about 45 percent of core cpi inflation. there was a fairly steady 3 / 5 bis - central bankers'speeches moderation in housing services inflation in 2023, as the slowing in market rent increases since 2022 began to gradually show through to the housing services price index. but we saw an unexpected jump in housing services inflation in the january cpi data. i plan to be watching to see if housing costs continue to run at a higher rate than expected. the remaining component of core cpi inflation is services excluding housing. this category is about 30 percent of the index. inflation in this category moderated over the course of 2023 but in january there was a broad - based increase. since business services are heavily reliant on labor input, this segment of prices is naturally significantly influenced by labor compensation, such as wages and benefits. so, one question is whether relatively elevated labor costs prevent moderation in this large component of inflation. as i consider all these aspects of inflation, i have to say that i see predominately upside risks to my general expectation that inflation will continue to move toward the fomc's 2 percent goal. on the flip side, i see little reason to expect that inflation will run below 2 percent for an extended period given the strong economic fundamentals we are observing in gdp and employment. for these reasons, i am going to need to see a couple more months of inflation data to be sure that january was a fluke and that we are still on track to price stability. this brings me to the implications of this outlook for monetary policy. let me pause here and say that typically the fomc considers easing policy only when there are fairly clear signs that the economy could be in or close to a recession. but,

between 2 and 3 times are high as the total unemployment rate. of the 27 eu countries, 20 of them have youth unemployment rates of 20 per cent or more, and 7 of these are in excess of 30 per cent. this phenomenon is of particular concern, as the longer people remain out of work, the less likely they are to ever work, or work again. the unemployment get deskilled, demotivated and disaffected, leading to the attendant social hardships and drain on society. it is also not just europe where unemployment has become a problem. us unemployment measured 5 per cent before the crisis, and peaked at around 10 per cent before declining to current levels of around 8, 5 per cent. youth unemployment is currently 16, 0 per cent. in the uk, youth unemployment – at 22, 2 per cent – is close to the 1 million mark. the problem of youth unemployment in the advanced economies is exacerbated by an ageing population which is putting strain on fiscal positions. the current low interest rate environment in these economies will make it even more difficult for private pension funds to generate adequate returns for this ageing population, with potential financial demands on governments. this factor has resulted in an extension of the working age in a number of countries, which makes it even more difficult to solve the youth unemployment problem, with the associated fiscal demands at a time when such programmes are being scaled back. the potential adverse social consequences of these developments are profound. the underlying lesson for south africa from all of this is the importance of generating sustained and employment - generating growth that is needed to attend to the growing inequalities. it is also clearly preferable, particularly in the short run, to improve a debt to gdp ratio by increasing gdp growth, as opposed to cutting down on the absolute level of debt. fiscal consolidation that is done too quickly could cause growth to decline, and this will cause the debt metrics to deteriorate and result in a negative debt spiral. when fiscal sustainability is called into question, the challenge is to find a balance between such fiscal consolidation and the need for growth. as i have indicated, south africa ’ s growth outlook in the short to medium term will be impacted to a significant degree by global developments. domestic economic growth in 2011 measured 3, 1 per cent following growth of 3, 2 per cent in the final quarter of the year. the bis central bankers ’ speeches growth forecasts for 2012 range between 2, 5 per cent and