1 Motivation Central banks rely on and play a key role in ensuring the stability of the ﬁnancial system. Yet, the deﬁnition of “ﬁnancial stability” as an explicit policy objective and the assignment of a role for central banks has been a relatively recent development.
However emerging market economies are expected to experience even higher inflation because of the higher weight of food in their consumption baskets. Inflation is therefore expected to increase to average 7.4 per cent in the developing economies. Food price inflation is much higher than overall headline inflation in many countries, including South Africa.