In contrast, South Africa’s headline inflation is forecast to fall from 6.3 percent in 2009 to 5.8 percent this year, in which case it will move towards the inflation target range of 3–6 percent. In Botswana, expectations are that the exchange rate influence on import prices will be minimal.
On a microeconomic level, private agents´ real money holdings depend amongst other determinants on their individual real income which is known to them.7 If agents are able to quickly adapt their money holdings, changes in their real income will quickly translate into changes in their money holding. As a consequence, changes in aggregate real income quickly lead to changes in aggregate money.