, over the longer term. page 8 of 9 conclusion allow me to end my address by reiterating that in line with its constitutional mandate, the sarb will continue to seek to ensure that the purchasing power of our currency is protected. monetary policy cannot contribute directly to stronger economic growth and employment creation in the long run, but by ensuring a stable financial environment, monetary policy fulfils an important precondition for the attainment of growth and development. monetary policy in south africa considers all factors driving inflation, including output growth and the external environment. monetary policy has an important role to play, but it needs to be part of a carefully defined overall macroeconomic policy mix. thank you. page 9 of 9

a keynote address by daniel mminele, deputy governor of the south african reserve bank, at the s & p dow jones indices south african seminar johannesburg 12 february 2019 understanding the core drivers of inflation in south africa introduction ladies and gentlemen, good morning, and thank you to s & p dow jones indices for inviting me to deliver the keynote address at this conference, which brings together a broad spectrum of investment management and other financial market professionals to discuss, among others, key drivers of south africa ’ s reinvention of itself to stimulate economic growth. the topic chosen for this address, ‘ understanding the core drivers of inflation in south africa ’, is of high relevance today – not just because of the key influence that price developments have on the economy in general, and on corporate investment decisions in particular, but also because of the growing debate, both at home and globally, about the mandate of central banks and what exactly they should be responsible for. within the context of today ’ s theme, i thought it might be useful to first provide some insight into how inflation has ended up relatively high in south africa, the challenges in bringing it lower, and how the south african reserve bank ( sarb ) sees the recent encouraging developments, and its outlook for consumer prices over the near to medium term. i will conclude my address by highlighting the sarb ’ s policy response to this inflation outlook and the risks thereto. page 1 of 9 a brief history of inflation challenges in south africa in recent years, south african consumer price inflation has regularly exceeded the median levels for both the world and large emerging markets. but this was not always the case. in the three decades or so that followed the second world war, south african inflation was largely in line with that of its main trading partners. the decoupling occurred mostly from the 1980s onwards, when central banks – in the advanced world at first, though later also in emerging markets – took effective steps to root out high inflation. by contrast, the 1980s saw south africa experience high and volatile inflation in an environment of growing supply constraints, disinvestment and sanctions, and a loosening of the fiscal stance by a government facing increasing pressure for political reform. the advent of democracy in 1994 saw increased focus on price stability as a necessary condition for growth and development, which is why the drafters of the constitution enshrined, in the country ’ s fundamental law, the sarb ’ s mandate of achieving and maintaining price stability in the interest of balanced and sustainable