policy play in this context? unfortunately, monetary policy has a limited role in kick - starting the economy, particularly given the causes of the slowdown. notwithstanding the interest rate increase in january, monetary policy is still accommodative and the repo rate low by historical standards, with the real repo rate being slightly negative. in effect, the 50 basis point increase simply offset the recent increase in actual and expected inflation. the problem of low growth and unemployment is therefore not high interest rates. the recent slowdown is clearly related to a fractious labour relations environment, while the unemployment rate is primarily structural in nature, and not something that monetary policy can solve. as we have stressed many times in the past, monetary policy can impact on the margin on cyclical growth and employment, but it cannot determine the potential real growth path of the economy. this is the domain of other policies that can directly influence the structural constraints on the economy. the primary mandate of the bank remains the achievement of price stability. inflation moved outside the target band in april, in line with the bank ’ s forecast, and we expect it to remain outside the target for the next four quarters. we also see an upside risk to this forecast, with the main risks coming from the exchange rate ( for reasons elaborated on above ) and food prices. other potential risks come from wage settlements should they significantly exceed productivity growth. in response to these inflation pressures, combined with the prospect of normalisation of monetary policy in the us, the mpc embarked on a tightening interest rate cycle in january, but stressed that the cycle would be moderate given the weak growth outlook. the mpc is sensitive to the fact that it risks being pro - cyclical, and it could undermine growth at the margin. this is the dilemma that monetary policy faces – that of rising inflation and slowing growth. monetary policy decision - making in a flexible inflation targeting framework needs to be sensitive to the general state of the economy. so any given inflation forecast may elicit a different monetary policy response, depending on the economic outlook. for example, the bis central bankers ’ speeches current inflation forecast may have produced a much stronger reaction had the economy been performing much better than it currently is. in other words, in a simple taylor rule world, the smaller the negative output gap, the stronger the interest rate response for any given deviation of inflation from the target. the monetary policy dilemma is compounded by the fact that the economy is not experiencing significant demand side inflation.

in water management, in roads and ports and in cold storage facilities. south african firms in the agricultural and agro - processing sector have the expertise, the know - how and the capital to invest in food production and processing on the continent. again, there are strong backward linkages between such investments abroad and jobs back home. it is often said that all economic progress is about moving up the value chain, producing ever more complex products. this can only be done through partnership and cooperation between bis central bankers ’ speeches the state, the private sector and our education and research communities. a major area of focus for the country is the manufacturing sector. manufacturing is important because it is a sector where productivity levels are already relatively high and the sector is able to generate well - paying jobs for millions of people. a major obstacle to faster growth in manufacturing has been a shortage of high level technical skills. that is where you come in. this university is at the cutting edge of producing the type of skills required for our manufacturing sector to move up the value chain, to enhance productivity and grow our exports. the central university of technology is the home of the centre for rapid prototyping and manufacturing. this university, supported by the national research foundation, is investing heavily in research in ‘ additive manufacturing ’, also known as 3d printing. 3d printing is likely to revolutionise aspects of manufacturing, lowering barriers to entry and allowing mid - sized economies to compete more effectively with other global players. these are exciting developments and i have no doubt that this university will play a greater role in helping our country to develop its advanced manufacturing sector. in conclusion ladies and gentlemen, despite significant challenges, south africa as a nation is in the process of determining its future ; it is a country that is growing, and with that growth comes opportunities. we must continuously raise the quality of our education system ; continuously keep up with the best developments globally so that we can produce young graduates who are at the cutting edge of the fields that they enter ; young people who will shape the future, drawing on the extraordinary strengths of all south africans. the future is contested terrain, and it will be determined by our vision of what that future could be and what we, together, do. it is largely in your hands now. again, thank you for this honorary doctorate. i humbly accept it on behalf of all south africans who are making a contribution to build a non - racial, democratic and prosperous south africa. thank you. bis central bankers ’ speeches