, but we do want to step in where liquidity evaporates. as the bank of england recently demonstrated, in a crisis a central bank has extraordinary abilities to stabilise conditions, buying time for markets to better read current conditions and to adjust. strong countries have good emergency response systems, and in a real crisis the south african reserve bank was there to backstop the system and return it to normal functioning. such extraordinary policy actions work best when the underlying financial structure is sound, in particular where the debt structure has a long maturity. this is an important reason why our yield curve is steep : long - term debt is genuinely being held, in volumes, by private investors, and it is priced accordingly. the point is : the news is in the price, and it is an attractive price. it is not an artificially low price, held down by policies that we cannot sustain or that are inconsistent with our economic conditions. there is another reason the prices of south african assets are attractive, and that is the exchange rate. as you know, in south africa we have a free - floating exchange rate, and we are very tolerant of exchange rate fluctuations. this is because we have low levels of foreign exchange debt, and we have inflation expectations that do not react strongly to exchange rate movements. this means the currency is free to adjust to global conditions, and when it depreciates, as it has done recently, it makes south african assets very attractive in foreign currency terms. you could say this is a strategy of attracting the smart money : when the currency moves a lot the smartest people buy, and this helps reverse the outflows. let me conclude with a reminder that appropriate policy targets, as well as policy consistency and complementarity are important characteristics of successful economies. increasing debt levels and high inflation are features of bad policy, imbalance and instability, not of sustainable economic growth. we have moved firmly back into a trajectory focused on sustainable fiscal policy, and with monetary policy capable and willing to reduce inflation, the investment environment in the country will continue to improve. i have spoken recently about adjustments to our inflation target itself, which i believe would be in line with the original planning for our inflation - targeting framework and deliver better economic results. i hold firmly that a better inflation target is like the example of a us $ 100 bill lying on the sidewalk, waiting for us to believe our eyes and pick it up. these steps are not enough to achieve the stronger economic growth rates the

into the household sector slowly but steadily. wages per worker have been somewhat weak mainly due to the following factors : firms, particularly small ones, have been restraining labor costs in the face of greater exposure to global competition and capital market discipline, and increased materials prices ; and with the high - salaried baby - boomer generation retiring, an increasing number of relatively low - salaried workers, such as new graduates and part - time workers, have been recruited. meanwhile, the number of employees has been increasing at a year - on - year rate of around 1 percent, and employee income has continued rising moderately. at the same time, strength in the corporate sector has been filtering through into the household sector via various channels, for example, increased dividends. while spending on clothes and other daily necessities has been somewhat weak, growth in spending in areas where firms have increasingly been providing new products and services designed to meet consumer needs has been high as evidenced by, for example, strong sales of digital appliances. spending behavior has thus varied with the type of goods and services, but private consumption, taken as a whole, has remained firm. in sum, our economy is currently experiencing moderate expansion. the virtuous circle of growth in production, income, and spending is likely to remain intact against the background of the expansion of the global market and the extremely accommodative financial conditions, although there are uncertainties regarding overseas economies and global financial markets. in this situation, upward pressures on prices are likely to build up gradually. looking at recent developments in price indices, while the domestic corporate goods price index ( cgpi ) has been rising mainly due to increases in international commodity prices, higher materials prices have not been passed through to the retail level as much as at the wholesale level. this seems to indicate that with intensifying competition among firms due partly to globalization and deregulation, many firms are restraining increases in prices through improvements in productivity and various cost reduction measures. in this situation, the year - on - year rate of change in the consumer price index ( cpi, excluding fresh food ) has remained at around 0 percent. however, if the economy continues to grow at a rate exceeding its potential, resource utilization, namely in labor and production capacity, will increase further. in such a situation, it is expected that supply and demand conditions for consumer goods and services will further tighten and that this will exert upward pressure on consumer prices as more firms pass on higher costs to consumers