Short-term Page 3 of 9  overshooting of the currency is likely, with some longer-term level change and passthrough into inflation expectations. But the exact long-term impact is uncertain. Estimates of the possible extent of selling by index-tracker funds range between R100 billion and R180 billion.
Taking a longer-term view, the current level of short-term nominal interest rates in the euro area is the lowest recorded over the past 50 years. More importantly, the low level of interest rates is at present associated with inflation expectations that are compatible with price stability. This has not often been the case in the past.